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Books  Relating  to  Corporations 


Companion  IDolumes 


CONYNGTON  ON  CORPORATE  ORGANIZATION 
8vo. , 6 x 9 in. , 350  pp. , 1905 
Prepaid,  Buckram  $2. 70  ; Sheep  $3.20 

Forms,  directions  and  information  relating  to  the 
organization  of  corporations.  Important  points  sus- 
tained by  citations.  In  general  use  among  attorneys. 


CONYNGTON  ON  CORPORATE  MANAGEMENT 
Second  Edition 
8vo.,  6x9  in.,  350  pp.,  1904 
Prepaid,  Buckram  $2.70;  Sheep  $3.20 

A handy  work  of  reference  for  the  use  of  lawyers  and 
corporation  officials,  containing  forms,  procedure  and 
practical  directions  for  the  management  of  corpora- 
tions. The  standard  work  of  its  kind. 


Both  books  prepaid  : — Buckram  $5. 25 ; Sheep  $6. 25 

The  Ronald  Press  Company 
203  Broadway,  New  York 


A MANUAL 


OF 

STATUTORY  CORPORATION  LAW 


CLASSIFIED 

CORPORATION  LAWS 

OF 

ALL  THE  STATES 

CONTAINING 

A Digest  of  the  Business  Corporation  Laws  of  Every 
State  and  Territory  of  the  United  States 
Arranged  Uniformly 
with  the 

Enactments  of  1906  Interleaved 


by 

M.  U.  OVERLAN  D 

OF  THE  NEW  YORK  BAR 


NEW  YORK 
THE  RONALD  PRESS 
1907 


Copyright  1905 


BY 

The  Ronald  Press  Company 


Copyright  1907 

BY 

The  Ronald  Press  Company 


PREFACE. 


The  present  volume  includes  the  1905  Session  Laws,  and 
therefore  presents  to  the  public  the  last  word  of  the  various  state 
legislatures  on  the  law  of  business  corporations.  Correspondence 
has  supplied  information  where  the  statutes  have  been  silent. 
Special  attention  has  been  given  to  the  laws  of  the  newly  acquired 
territories  and  dependencies  of  the  United  States. 

The  plan  of  the  work  has  been  to  present  the  laws  of  each 
state  under  a uniform  arrangement  of  subjects,  so  that  for  every 
state  information  on  any  particular  point  will  be  found  in  the 
same  relative  position.  In  the  subject  arrangement  the  order 
in  which  investigation  is  usually  made  has  been  followed.  While 
this  order  may  not  be  strictly  logical,  it  will  be  found  convenient, 
permitting,  in  connection  with  the  uniformity  of  arrangement, 
the  essential  features  of  the  law  of  each  state  to  be  discovered 
at  a glance. 

The  provisions  governing  foreign  corporations  in  each  state 
are  also  given  in  practically  the  same  order  and  the  digest  closes 
with  a statement  of  the  laws  of  the  particular  state  against 
combinations  and  monopolies. 

The  decisions  of  the  courts  of  the  various  states  being  fairly 
uniform  on  those  points  in  which  the  statutes  generally  agree, 
only  those  important  citations  have  been  given  which  involve 
distinctive  or  peculiar  features  of  the  statute  laws. 

The  confused  state  of  the  corporation  laws  in  many  of  the 
states  has  made  absolute  certainty  in  the  present  digest  almost 
impossible.  Every  care  has,  however,  been  taken  to  reduce  errors 
to  a negligible  quantity. 

To  the  busy  lawyer  or  man  of  affairs  it  is  hoped  that  this 
book  will  prove  an  efficient  aid  in  the  selection  of  corporate 

iii 


I 044 


IV 


PREFACE. 


domiciles,  in  the  conduct  of  corporate  business  in  the  various 
states  and  in  such  other  contingencies  of  corporation  practice  as 
require  reference  to  the  statutory  laws  of  the  states.  To  the 
student  the  work  should  also  be  of  value  as  affording  a convenient 
and  comprehensive  means  of  comparing  the  various  corporation 
laws  of  the  Union. 

M.  U.  Overland. 


New  York  City, 

December  ist,  1905. 


OUTLINE. 


The  outline  given  below  is  followed  in  the  treatment  of  each 
state,  the  numbering  and  titles  being  the  same  in  every  case  as  far 
as  possible.  Under  the  general  heading  “Incorporation”  the  indicated 
arrangement  has  of  necessity  varied  with  the  procedure  of  the  differ- 
ent states.  In  some  few  other  cases  the  arrangement  varies  occasion- 
ally to  meet  the  conditions.  In  the  main,  however,  the  outline  has 
been  closely  followed.  The  general  headings  will  be  found  the  same 
for  every  state. 


1.  Corporation  Laws. 

Constitution. 

Statutes. 

2.  Taxes  and  Fees. 

Organization  Expenses. 

Franchise  Tax. 

Local  Taxation. 

General. 

3.  Incorporation. 

Incorporators. 

Certificate  of  Incorporation: 

Preparation  and  contents,  particularly  as  to — 

1.  Name. 

2.  Location. 

3.  Purposes. 

4.  Capital  Stock. 

5.  Incorporators,  Directors,  Officers. 

6.  Duration. 

7.  Special  Provisions. 

Filing  and  Recording. 


Y 


OUTLINE. 


4.  Organization. 

First  Meetings. 

By-laws. 

Certificates. 

5.  Corporate  Existence. 

When  Commenced. 

Beginning  Business. 

Renewal. 

Forfeiture  of  Charter. 

Dissolution. 

6.  Corporate  Powers. 

General. 

To  Hold  Property. 

(a)  To  Hold  Its  Own  Stock. 

(b)  To  Hold  Stock  of  Other  Corporations. 
To  Borrow  Money. 

To  Do  Business  in  Other  States. 

Consolidation  or  Merger. 

Amendment  of  Charter. 

7.  Capital  Stock. 

Amount. 

Initial  Payment. 

Consideration  for  Issue. 

Increase  or  Decrease. 

Classes  of  Stock. 

Par  Value  of  Shares. 

Stock  Certificates. 

Transfer  of  Stock. 

8.  Stockholders. 

Rights  and  Powers. 

Liability. 

Meetings. 

(a)  Place. 

(b)  Notice. 

(c)  Quorum. 

(d)  Voting. 

(e)  Proxies. 


OUTLINE. 


VI 1 


9.  Directors. 

Number. 

Qualifications. 

Powers. 

Liability. 

Meetings. 

(a)  Place. 

(b)  Notice. 

(c)  Quorum. 

Executive  Committee. 

10.  Officers. 

11.  Principal  Office. 

12.  Corporate  Books. 

What  Required. 

Where  Kept. 

Examination  of. 

13.  Reports. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business. 
Penalties  for  Non-Compliance. 
Taxation. 

Books. 

Reports. 

Attachments  Against. 

15.  Combinations  and  Monopolies. 


LIST  OF 


STATES  AND  TERRITORIES  INCLUDED. 


1.  Alabama 

2.  Alaska 

3.  Arizona 

4.  Arkansas 

5.  California 

6.  Colorado 

7.  Connecticut 

8.  Delaware 

9.  District  of  Columbia 

10.  Florida 

11.  Georgia 

12.  Hawaii 

13.  Idaho 

14.  Illinois 

15.  Indiana 

16.  Indian  Territory 

17.  Iowa 

18.  Kansas 

19.  Kentucky 

20.  Louisiana 

21.  Maine 

22.  Maryland 

23.  Massachusetts 

24.  Michigan 

25.  Minnesota 

26.  Mississippi 

27.  Missouri 


28.  Montana 

29.  Nebraska 

30.  Nevada 

31.  New  Hampshire 

32.  New  Jersey 

33.  New  Mexico 

34.  New  York 

35.  North  Carolina 

36.  North  Dakota 

37.  Ohio 

38.  Oklahoma 

39.  Oregon 

40.  Pennsylvania 

41.  Philippine  Islands. 

42.  Porto  Rico 

43.  Rhode  Island 

44.  South  Carolina 

45.  South  Dakota 

46.  Tennessee 

47.  Texas 

48.  Utah 

49.  Vermont 

50.  Virginia 

51.  Washington 

52.  West  Virginia 

53.  Wisconsin 

54.  Wyoming 


ALABAMA. 


1.  Corporation  Laws.* 

Constitution.  (1902.)  Legislature  shall  not  grant  charters  to 
any  corporation,  association  or  individual  (Art.  IV,  § 104),  and  shall 
pass  no  special  act  conferring  corporate  powers,  but  shall  pass  general 
laws.  Art.  XII,  § 229.  No  corporation  shall  issue  stock  or  bonds 
except  for  money,  labor  done,  or  property  actually  received;  and  all 
fictitious  increase  of  stock  or  indebtedness  shall  be  void.  Art.  XII, 
§ 234.  No  corporation  shall  engage  in  any  other  business  than  that 
expressly  authorized  in  its  charter.  Id.  Stockholders  shall  not  be  in- 
dividually liable  for  corporate  debts,  except  for  the  unpaid  stock 
owned  by  them.  Id.  Preferred  stock  may  only  be  issued  by  con- 
sent of  two-thirds  in  interest  of  the  capital  stock,  and  stock  and 
bonded  indebtedness  may  only  be  increased  under  the  general  laws 
and  with  consent  of  a majority  of  the  issued  stock,  obtained  at  a 
duly  called  meeting.  Id. 

Statutes.  The  general  corporation  law  is  embodied  in  the  General 
Acts  of  1903,  Act  395.  Under  this  law  corporations  may  be  formed 
for  any  lawful  business  or  businesses  of  any  kind  or  nature  whatso- 
ever. It  covers  by  special  sections  banks,  gas,  railway,  canal,  naviga- 
tion and  other  transportation  companies,  telegraph  and  telephone 
companies;  also  other  corporations  for  internal  improvements  and 
public  utilities. 

The  .Code,  1896,  Ch.  28,  is  not  repealed,  but  only  superseded  in 
part  by  the  Act  of  1903;  and  Articles  III  and  IV,  relating  respectively 
to  mutual  aid  and  building  and  loan  associations,  and  Ch.  63,  relat- 
ing to  insurance  companies,  are  expressly  exempted  from  its  appli- 
cation. § 54.  The  taxation  of  foreign  corporations  is  provided  for 
by  Laws  of  1903,  Act  368. 

2.  Taxes  and  Fees. 

Organization  Expenses.  State  fees  paid  to  Probate  Judge:  On 

capital  stock  not  exceeding  $50,000,  $25;  exceeding  $50,000  but  not 
exceeding  $100,000,  $50;  exceeding  $100,000,  $50  on  the  first  $100,000 
and  $25  on  each  additional  $100,000  or  fractional  part  thereof.  § 5. 
Fees  to  Probate  Judge:  For  examination  of  certificate  of  incorpora- 

tion, $2.50;  for  recording  same,  15  cents  for  each  hundred  words.  § 4. 
To  Secretary  of  State  for  filing  statement  of  Probate  Judge,  50  cents. 
§6. 


* References,  except  where  otherwise  stated,  are  to  General  Acts,  1903,  Act  395. 


9 


10 


CLASSIFIED  CORPORATION  LAWS. 


Franchise  Tax.  Code  of  1896,  § 4122,  as  amended  by  L.  1901, 
Act  1151,  is  in  force  and  provides  (p.  2616)  for  an  annual  franchise 
tax,  due  October  1st  of  each  year  as  follows:  Capital  stock  not  ex- 

ceeding $10,000,  $10;  exceeding  $10,000  but  not  more  than  $25,000,  $15; 
exceeding  $25,000  but  not  more  than  $50,000,  $25;  exceeding  $50,000 
but  not  more  than  $100,000,  $50;  exceeding  $100,000  but  not  more 
than  $200,000,  $75;  exceeding  $200,000  but  not  more  than  $300,000, 
$125;  exceeding  $300,000  but  not  more  than  $400,000,  $170;  exceeding 
$400,000  but  not  more  than  $500,000,  $200;  exceeding  $500,000  but 
not  more  than  $1,000,000,  $300;  exceeding  $1,000,000,  $500. 

Local  Taxation.  Same  as  against  individuals.  No  exemptions. 
Tax  year  begins  January  1st;  taxes  become  due  October  1st;  lien 
attaches*  therefor  January  1st  following.  Shares  of  stock  are  taxable 
as  against  the  stockholders,  but  returns  are  made  by  the  corporation, 
which  also  pays  the  tax. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more,  comprising  all  the  sub- 
scribers to  the  capital  stock  named  in  the  certificate  of  incorporation. 
No  requirements  as  to  residence.  § 1. 

Certificate  of  Incorporation.  Must  be  signed  by  all  the  sub- 
scribers to  the  capital  stock  named  therein.  § 2.  The  statute  is 
silent  as  to  acknowledgment.  It  must  set  forth  (§  2) : 

(1)  Name  of  the  corporation,  which  must  not  be  similar 
to  that  of  any  corporation  already  existing  in  the  State.  If 
the  name  of  a person  or  partnership  be  assumed,  some  word 
must  be  added  designating  the  nature  of  at  least  one  of  the 
businesses  to  be  carried  on,  followed  by  the  word  “com- 
pany” or  “corporation.” 

(2)  Object  or  objects  for  which  the  corporation  is  formed. 

(3)  Location  of  principal  office  in  the  State. 

(4)  Amount  of  total  authorized  capital  stock,  which  must 
not  be  less  than  $2,000;  the  number  of  shares  into  which 
the  same  is  divided;  the  amount  of  capital  with  which  the 
corporation  will  begin  business,  which  shall  not  be  less  than 
twenty-five  per  cent,  of  the  authorized  capital,  and  in  no  case 
less  than  $1,000;  and  if  more  than  one  class  of  stock  be  cre- 
ated by  the  certificate,  a description  of  the  different  classes 
of  stock,  with  the  terms  on  which  each  class  is  created. 

(5)  Name  and  post-office  address  of  the  officer  or  agent 
designated  by  the  incorporators  to  receive  subscriptions  to 
the  capital  stock. 

(6)  Names  and  post-office  addresses  of  the  incorporators, 
and  the  number  of  shares  subscribed  for  by  each,  the  aggre- 
gate of  which  subscriptions  shall  be  the  capital  stock  with 
which  the  company  will  commence  business;  the  names  and 


ALABAMA. 


II 


post-office  addresses  of  the  directors  and  officers  chosen  for 
the  first  year. 

(7)  Period,  if  any,  limited  for  the  duration  of  the  cor- 
poration. May  be  perpetual. 

(8)  Any  other  provisions  desired  for  the  regulation  of 
the  business  of  the  corporation,  and  defining  the  powers  of 
the  corporation,  the  directors  and  stockholders  and  classes 
of  stockholders. 

The  certificate  shall  have  attached  to  it  a statement  under  oath, 
by  the  person  authorized  to  receive  subscriptions,  showing  the  amount 
of  capital  stock  paid  in,  and  the  amount  of  stock  secured  by  con- 
tracts for  stipulated  labor  or  services  or  transfer  of  property,  which 
amounts  so  paid  in  and  secured  shall  be  at  least  twenty  per  cent,  of 
the  stock  subscribed  for,  and  in  no  case  less  than  $1,000.  § 3. 

Filing  and  Recording.  The  certificate  of  incorporation  shall  be 
filed  and  recorded  in  the  office  of  the  probate  judge  of  the  county  in 
which  the  principal  place  of  business  of  the  corporation  is  established. 
§ 4.  Within  ten  days  after  such  filing  the  corporation  shall  cause 
to  be  filed  in  the  office  of  the  Secretary  of  State  a statement  signed 
by  the  probate  judge  giving  the  name  of  the  corporation,  the  names 
of  its  incorporators,  the  date  of  incorporation,  the  amount  of  capital 
stock,  and  the  name  of  the  county  in  which  incorporated.  For  failure 
to  file  this  statement  the  corporation  forfeits  to  the  State  fifty  dollars, 
to  be  recovered  at  the  suit  of  the  State.  § 6. 

4.  Organization. 

First  Meetings.  The  first  meeting  of  stockholders  is  held  with- 
in the  State.  The  incorporators  may  attend  in  person  or  by  proxy. 
The  meeting  is  usually  assembled  by  written  call  and  waiver,  signed 
by  all  the  incorporators  and  providing  for  the  time,  place  and  general 
purposes  of  the  meeting.  At  this  meeting  by-laws  are  usually  adopted 
and  such  other  preliminary  business  transacted  as  may  be  necessary. 
L.  1903,  Act  no. 

The  first  meeting  of  directors  is  also  held  within  the  State,  is 
usually  assembled  by  call  and  waiver,  and  transacts  such  business  as 
is  necessary  to  complete  the  organization  of  the  corporation  and 
begin  its  active  business  operations. 

By-Laws.  By-laws  are  generally  adopted  by  the  stockholders  at 
their  first  meeting  and  cover  the  usual  details  of  corporate  procedure. 
No  statutory  provisions. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  certificate  of  incorporation  with 
probate  judge  and  payment  of  fees  (§  6),  and  lasts  five  years  beyond 
dissolution  or  forfeiture,  for  the  purpose  of  settling  the  corporation’s 


12 


CLASSIFIED  CORPORATION  LAWS. 


business.  § 53.  Can  not  be  collaterally  questioned.  Harris  v.  Co., 
128  Ala.  652  (1900). 

Beginning  Business.  May  be  commenced  on  filing  and  record- 
ing certificate  of  incorporation  in  office  of  probate  judge.  § 6.  City 
of  Greenville  v.  Greenville  W.  Co.,  125  Ala.  625  (1900).  Must  be 
begun  within  five  years.  § 37. 

Renewal.  May  be  secured  for  a further  period  of  twenty  years 
(§  7,  subdiv.  n)  by  resolution  of  the  board  declaring  such  extension 
desirable  and  calling  a meeting  of  the  stockholders,  at  which  a vote 
of  the  holders  of  the  larger  amount  in  value  of  each  class  of  voting 
stock  must  be  in  favor  of  the  extension;  whereupon  a certificate  re- 
citing the  facts  is  signed  by  the  president  and  secretary  under  the 
corporate  seal,  acknowledged  and  filed  in  the  office  of  the  probate 
judge  of  the  county  in  which  the  original  certificate  of  incorporation 
was  filed,  together  with  a consent  in  writing,  signed  in  person  or  by 
proxy  by  the  assenting  stockholders.  § 47. 

Forfeiture  of  Charter.  Non-user  of  corporate  franchise  for  five 
consecutive  years  is  a forfeiture  of  such  franchise.  § 37.  But  only 
by  judicial  determination.  State  v.  R.  R.  Co.,  108  Ala.  29;  Block  v. 
Mining  Co.,  129  Ala.  528  (1901). 

Dissolution.  A corporation  may  be  dissolved  by  an  agreement 
in  writing  signed  by  all  the  stockholders,  acknowledged  by  the  presi- 
dent and  filed  and  recorded  in  the  office  of  the  probate  judge  of  the 
county  where  the  corporation  was  organized,  together  with  pre- 
scribed certification  and  publication  thereof.  § 48. 

If  unanimous  consent  can  not  be  secured,  dissolution  may  be 
effected  by  petition  of  two-thirds  of  the  stock  to  the  Chancery  Court 
of  the  division  where  the  principal  place  of  business  of  the  corpora- 
tion is  located,  or  any  other  court  having  chancery  jurisdiction.  § 49; 
McKleroy  v.  G.  L.  & I.  Co.,  126  Ala.  184  (1899). 

6.  Corporate  Powers. 

General.  The  usual  common  law  powers  are  conferred  by  the 
statutes.  § 7. 

Corporations  are  also  expressly  authorized  to  hold  stockholders’ 
and  directors’  meetings  without  the  State  under  prescribed  conditions. 
§ 7.  (See  under  §§  8 and  9,  “Meetings.”)  Also  mining,  quarrying 
and  manufacturing  corporations  may  construct  and  operate  to  and 
from  their  mines,  quarries  or  works,  railways,  tramways,  canals,  tun- 
nels and  roads  (§  14),  and  may  construct  or  purchase  and  operate 
steamboats,  barges  and  ships  and  transport  freight  and  passengers 
thereon.  § 10. 

To  Hold  Property.  This  power  is  given  broadly.  § 7,  subdiv.  c; 
§ 25. 

Its  Own  Stock.  The  purchase  by  a corporation  of  its 
own  stock  is  void  if  by  such  transaction  the  corporation’s  ability  to 
satisfy  its  creditors  is  impaired.  Hall  & Farley  v.  Henderson,  126 

Ala.,  449  (1899)- 


ALABAMA. 


13 


Stock  of  Other  Corporations.  This  power  is  fully  given 
in  § 7,  subdiv.  j,  excepting  only  railroad  and  telegraph  and  telephone 
companies,  which  are  forbidden  to  consolidate  with  or  to  acquire  a 
controlling  interest  in  any  like  company  owning  competing  lines,  or  to 
acquire  such  competing  .lines.  Morris  v.  Co.,  125  Ala.  263  (1899). 

To  Borrow  Money.  No  bonded  indebtedness  may  be  created  or 
increased  nor  real  estate  mortgaged,  without  obtaining  the  consent 
of  the  persons  holding  the  larger  amount  in  value  of  the  capital  stock, 
present  and  voting  in  person  or  by  proxy,  at  a regular  meeting,  or  at 
a meeting  called  for  that  purpose.  § 7,  subdiv.  c.  “No  corporation 
shall  issue  stock  or  bonds  except  for  money,  labor  done  or  property 
actually  received;  and  all  fictitious  increase  of  stock  or  indebtedness 
shall  be  void.”  Const.,  Art.  XII,  § 234.  See,  however,  Bibb  v.  Hall 
& Farley,  101  Ala.  79;  Dexter  v.  McClellan  & Scheerer,  116  Ala.  37. 

To  Do  Business  in  Other  States.  This  power  is  given  fully  in 
§ 7,  subdiv.  i. 

Consolidation  or  Merger.  Is  permitted  by  § 7,  subdiv.  k,  with 
limitations  as  to  railroad,  telegraph  and  telephone  companies,  bank- 
ing and  insurance  corporations  and  the  like.  The  resulting  corpor- 
ation may  be  either  one  of  those  consolidated,  or  a new  corporation. 
Directions  as  to  procedure  for  consolidation  are  found  in  §§  39-42; 
L.  1903,  Act  1 17. 

Amendment  of  Charter.  Any  obvious  omissions  or  errors  in  the 
charter  may  be  supplied  or  corrected  by  statement  duly  verified  by 
the  president  or  other  chief  executive  head  of  the  corporation,  filed 
in  the  office  of  the  probate  judge  of  the  county  in  which  the  corpor- 
ation was  organized.  § 45. 

General  amendments  of  the  charter  may  be  effected  by  majority 
vote  of  each  class  of  stock  having  the  voting  power.  Such  vote  must 
be  cast  at  a meeting  called  by  the  directors  for  the  purpose,  the  pro- 
ceedings thereat  being  duly  certified  to  the  probate  judge.  § 47. 

7.  Capital  Stock. 

Amount.  Must  not  be  less  than  $2,000.  No  maximum  limit  ex- 
cept as  to  building  and  loan  associations,  which  must  not  exceed 
$10,000,000.  § 2,  subdiv.  d;  § 46. 

Initial  Payment.  Twenty-five  per  cent,  of  the  authorized  capital 
must  be  actually  subscribed  before  certificate  of  incorporation  will 
be  filed.  Twenty  per  cent,  of  such  subscription,  and  in  no  case  less 
than  $1,000,  must  be  paid,  either  in  cash,  property  or  labor  or  ser- 
vices secured  by  contract,  at  time  certificate  is  filed.  §§  2,  34;  L.  1903, 
Ch.  no. 

Consideration  for  Issue.  Subscriptions  are  payable  in  money,  but 
necessary  services  or  labor  or  transfer  of  property  may  be  received 
therefor  at  the  reasonable  value  thereof,  in  which  case  the  subscription 
If  list  must  show  the  nature  of  the  services  or  labor-  and  give  a brief 


14 


classified  corporation  laws. 


description  of  the  property  and  the  time  of  transfer.  § 2 6.  Stock 
shall  only  be  issued  for  money,  labor  done  or  property  actually  re- 
ceived. Const.,  Art.  XII,  § 234. 

Increase  or  Decrease.  The  capital  stock  may  be  increased  or 
reduced  subsequent  to  incorporation  by  amendment  of  charter.  On 
an  increase  the  same  fees  on  the  amount  of  increase  are  paid  to  the 
probate  judge  as  on  original  incorporation.  § 5;  § 7,  subdiv.  1.  Such 
amendment  requires  a majority  vote  of  the  stock  at  a meeting  held 
on  notice  setting  forth  the  amount  of  increase  or  reduction;  a cer- 
tificate of  the  proceedings  at  such  meeting  is  made  by  the  president 
or  secretary,  under  the  corporate  seal,  and  filed  and  recorded  in  the 
office  of  the  probate  judge  of  the  county  in  which  the  corporation 
was  organized.  § 46. 

Classes  of  Stock.  Preferred  stock  may  be  provided  for  in  the 
certificate  of  incorporation  (§  2,  subdiv.  d.),  or  the  same  may  be 
authorized  by  a vote  of  two-thirds  of  the  stock  at  a meeting  called 
for  that  purpose,  but  in  no  case  shall  such  issue  of  preferred  stock 
exceed  two-thirds  of  the  entire  paid  up  capital  stock.  The  proceed- 
ings of  any  such  meeting  are  to  be  certified,  filed  and  recorded  as  in 
case  of  an  increase  of  capital  stock.  § 43;  Const.,  Art.  XII,  § 237. 
Such  preferred  stock  is  to  be  first  ofifered  to  the  stockholders  in  pro- 
portion to  their  holdings  of  the  common  stock.  § 43. 

Par  Value  of  Shares.  May  be  any  amount.  § 2,  subdiv.  d. 

Stock  Certificates.  Must  be  signed  by  the  president  and  secre- 
tary or  treasurer.  § 28. 

Transfer  of  Stock.  Must  be  made  on  the  books  of  the  corpora- 
tion; also  pledges  thereof,  and  must  be  entered  on  the  books  of  the 
corporation  within  fifteen  days  after  the  transfer  or  same  will  be 
void  as  to  judgment  creditors  or  subsequent  purchasers  without  notice. 
§§  29,  30,  32. 

8.  Stockholders. 

Rights  and  Powers.  Stockholders  control  amendments  to  charter. 
A two-thirds  vote  is  required  to  consolidate  with  other  corporations 
(§  39))  issue  preferred  stock  (§  43),  or  to  petition  the  Court  of  Chan- 
cery for  dissolution.  § 49.  The  consent  of  all  the  resident  stock- 
holders is  necessary  to  authorize  the  holding  of  stockholders’  meet- 
ings without  the  State  (§  7,  subdiv.  g)  or  to  dissolve  the  corporation 
(§  48)  without  petition.  Preferred  stock  must  be  first  offered  to  the 
stockholders  in  proportion  to  their  holdings  of  the  common  stock, 
or  in  less  amount  if  desired,  before  being  offered  for  sale  to  the  pub- 
lic. § 43.  They  have  the  right  of  access  to  and  examination  of  the 
books,  records  and  papers  of  the  corporation  at  reasonable  and 
proper  times.  § 35. 

Liability.  Stockholders  are  liable  for  the  debts  of  the  corpora- 
tion only  to  the  extent  of  the  unpaid  stock  held  by  them.  § 27;  Const., 
Art.  XII,  § 238. 


ALABAMA. 


15 


Meetings.  Of  stockholders  must  be  held  annually  (§  38),  and 
except  as  stated  below,  be  held  within  the  State,  but  may,  by  writ- 
ten consent  of  all  the  resident  stockholders,  duly  acknowledged  and 
recorded  in  the  office  of  the  Secretary  of  State,  be  held  without  the 
State.  § 7,  subdiv.  g.  Copies  of  the  proceedings  at  all  stockholders’ 
and  directors’  meetings  held  without  the  State  must  be  deposited 
with  the  agent  in  charge  of  the  principal  office  within  the  State.  Id. 
Certificate  giving  name,  etc.,  of  agent  in  charge  of  principal  office 
must  be  filed  with  the  Secretary  of  State  and  with  the  probate  judge 
of  the  county  in  which  the  principal  office  is  located.  § 38. 

Notice.  May  be  as  prescribed  by  the  by-laws,  but  special  meet- 
ings required  by  the  statutes  shall  be  called  by  the  directors;  thirty 
days’  notice  of  the  time,  place  and  purpose  thereof  to  be  given  each 
stockholder  personally  or  by  letter,  and  also  by  publication  once  a 
week  for  four  weeks  in  a newspaper  published  at  or  nearest  to  the 
principal  place  of  business.  § 38. 

Quorum.  Not  prescribed. 

Voting.  May  be  in  person  or  by  proxy  if  so  provided  by  the 
charter  or  by-laws.  § 38;  Perry  v.  Mill  Co.,  93  Ala.  364. 


9.  Directors. 

Number.  The  directors  must  be  at  least  three  (§  36)  and  their 
number  may  be  increased  or  diminished  with  the  consent  of  a ma- 
jority in  interest  of  the  capital  stock,  expressed  by  a vote  at  a regular 
meeting,  or  at  a special  meeting  called  for  that  purpose.  § 44. 

Qualifications.  Directors  must  be  stockholders  but  need  not  be 
residents. 

Powers.  The  directors  may  mortgage  or  convey  the  personal 
property  of  a corporation  without  the  consent  of  the  stockholders, 
to  secure  money  borrowed  or  debts  contracted.  § 7,  subdiv.  c.  They 
fill  vacancies  on  the  board  (§  36),  and  call  all  meetings,  unless  other- 
wise provided  by  the  by-laws.  § 38. 

Liability.  There  is  no  statutory  liability  imposed  on  the  direc- 
tors except  for  actual  fraud.  Criminal  Code,  § 4776;  Wilson  v. 
Stevens,  129  Ala.  630  (1901). 

Meetings.  Directors’  meetings  may  be  held  without  the  State, 
but  copy  of  the  proceedings  at  meetings  held  without  the  State  must 
be  deposited  with  the  agent  at  the  corporation’s  principal  office  in 
the  State.  § 7,  subdiv.  g.  By-laws  should  prescribe  notice.  A majority 
constitutes  a quorum.  § 36. 

Executive  Committee.  No  statutory  provisions,  but  such  com- 
mittees are  commonly  appointed  as  a matter  of  practice. 

10.  Officers. 


The  corporate  officers  are  not  prescribed  by  the  statutes,  but  cor- 
porations are  given  the  power  to  appoint  such  officers  as  may  be  re- 


CLASSIFlfit)  CORPORATION  LAWS. 


t6 

quired.  § 7,  subdiv.  d.  No  liability  attaches  to  officers  save  the  crim- 
inal liability  for  actual  misrepresentation  or  fraud  in  the  transfer  of 
stock.  Criminal  Code,  1896,  § 4776. 

11.  Principal  Office. 

Every  corporation  must  have  an  office  within  the  State  in  charge 
of  an  agent  on  whom  process  may  be  served.  § 2,  subdiv.  c;  § 7, 
subdiv.  g.  Location  may  be  changed  by  amendment  of  charter.  § 47. 

12.  Corporate  Books. 

A stock  and  transfer  book  is  required,  to  be  kept  in  the  State  in 
the  hands  of  some  agent  designated  for  that  purpose.  The  stock 
book  must  contain  a list  of  the  stockholders  with  transfers,  pledges, 
etc.  § 32.  Copies  of  all  proceedings  at  meetings  of  directors  and 
stockholders  held  without  the  State  must  also  be  deposited  with  such 
agent.  § 7,  subdiv.  g. 

Examination  of.  The  stockholders  have  the  right  of  access  to 
and  examination  of  the  books,  records  and  papers  at  reasonable  and 
proper  times.  § 35;  Cobb  v.  Lagarde,  129  Ala.  488  (1901). 

13.  Reports. 

No  annual  statements  or  reports  are  required  by  the  statutes, 
except  a sworn  statement  of  all  taxable  property  of  the  corporation, 
real  and  personal,  with  its  assessed  valuation  for  that  year,  which 
must  be  filed  by  the  executive  officer  of  the  corporation  with  the 
assessor  of  the  county  in  which  the  chief  or  home  office  is  located, 
for  the  purpose  of  deducting  said  assessed  valuation  from  the  taxable 
value  of  the  shares  of  stock  of  the  corporation.  L.  1901,  Act.  1151,  § 6. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  doing 
business  in  the  State  must  have  at  least  one  known  place  of  business 
in  the  State,  and  an  authorized  agent  or  agents  residing  thereat  (Code, 
1896,  § 1316),  and  must  file  with  the  Secretary  of  State  a certified  copy 
of  their  articles  of  incorporation  or  association.  Const.,  1902,  Art.  XII, 
§ 232.  Corporations  organized  under  the  laws  of  the  United  States 
and  those  engaged  in  or  transacting  business  of  interstate  commerce 
are  exempted  from  the  provisions  as  to  foreign  corporations.  Code, 
1896,  § 1324. 

Before  filing  papers  for  permission  to  do  business  in  the  State, 
foreign  corporations  must  pay  to  the  State  Treasurer  one-tenth  of 
one  per  cent,  on  the  amount  of  capital  to  be  actually  employed  in  the 
State.  The  executive  head  of  the  corporation  and  its  secretary  must 
make  a sworn  statement  to  the  officers  to  whom  this  tax  is  payable, 
stating  the  name  of  the  corporation  and  the  state  or  country  under 
whose  laws  it  was  incorporated,  its  principal  place  of  business  with- 
in the  State,  the  total  amount  of  its  capital  stock  and  the  actual 
amount  of  capital  employed  or  to  be  employed  within  the  State.  The 


ALABAMA. 


1 7 


officer  to  whom  the  tax  is  payable  may  also  summon  the  officers  of 
the  corporation  before  him,  and  conjpel  production  of  the  books  of 
the  corporation.  L.  1903,  Act  368,  § 2,  b. 

Penalties  for  Non-Compliance.  Inability  to  sue  in  the  State 
courts,  and  liability  to  fine  of  $1,000.  Same  for  non-payment  of  tax. 
L.  1903,  Act  368,  § 2,  d.  Agent  of  such  corporation  is  also  liable  to  a 
line  of  $500.  All  such  fines  are  recoverable  at  the  suit  of  the  State. 
Code,  1896,  §§  1318-1320. 

Taxation.  Every  foreign  corporation,  except  railroad,  telegraph, 
long  distance  telephone,  express  and  sleeping  car,  life  and  fire  insur- 
ance, building  and  loan,  or  banking  corporations,  authorized  to  do 
business  under  the  general  law,  shall  pay  to  the  judge  of  probate  of 
the  county  in  which  it  has  a resident  agent,  a license  fee  of  one- 
tenth  of  one  per  cent,  for  the  use  of  the  State  and  one-half  that  sum 
for  the  use  of  the  county,  to  be  computed  on  the  basis  of  the  actual 
amount  of  capital  employed  by  it  within  the  State.  This  tax  be- 
comes due  on  January  1st  of  each  year.  L.  1903,  Act  368,  § 2.  Foreign 
corporations  engaged  in  the  business  of  lending  money  in  Alabama 
are  exempt. 

Reports.  No  annual  reports  are  required  except  of  railroad,  in- 
surance and  building  and  loan  corporations.  Code,  1896,  §§  1109,  1129, 
3498.  But  foreign  corporations  must  make  same  tax  returns  as  re- 
quired of  domestic  corporations  by  L.  1901,  Act  1151,  § 6. 

Attachments  Against.  Lie  as  against  natural  persons  residing 
without  the  State.  Code,  1896,  § 535. 

15.  Combinations  and  Monopolies. 

Very  strict  prohibitions  exist  against  combinations  of  any  kind. 
Const.,  1902,  Art.  IV,  § 74;  Code,  1896,  §§  55 57-9. 


ALASKA. 


i.  Corporation  Laws.* 

An  Act  of  Congress  of  March  2,  1903  (32  U.  S.  Stat.  at  Large, 
Ch.  978,  p.  944)j  amends  the  Civil  Code  of  Alaska  and  adds  to  it  Ch. 
37  providing  for  the  organization  of  private  corporations.  Foreign 
corporations  are  provided  for  in  Civil  Code  §§  225-231. 

Under  the  Code,  corporations  may  be  formed,  (1)  To  construct, 
own  and  operate  railroads,  tramways,  street  railways,  wagon  roads, 
canals,  flumes,  and  telegraph  and  telephone  lines  in  Alaska.  (2)  To 
acquire,  hold  and  operate  mines  in  Alaska.  (3)  To  carry  on  the 
fishery  industry  in  all  its  branches  in  Alaska,  and  in  the  waters  con- 
tiguous and  adjacent  thereto.  (4)  To  construct  and  operate  smelters, 
electric  and  other  power  and  lighting  plants,  docks,  wharves,  eleva- 
tors, warehouses  and  hotels  in  Alaska.  (5)  To  carry  on  trade,  trans- 
portation, agriculture,  lumbering  and  manufacturing  in  Alaska.  § 1. 


2.  Taxes  and  Fees. 

Organization  Expenses.  No  license  tax  is  prescribed.  Recording 
fees  are  15  cents  per  folio  of  100  words. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Same  as  for  individuals.  Mercantile,  manufact- 
uring and  mining  businesses  must  pay  a license  fee  according  to 
amount  of  business  done.  31  U.  S.  Stat.  at  L.,  p.  330. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more  adult  persons,  bona  fide 
residents  of  the  District  of  Alaska.  § 1. 

Articles  of  Incorporation.  The  incorporators  must  subscribe  and 
acknowledge  in  triplicate  articles  of  incorporation,  to  contain  (§  2) : 

(1)  Name  of  the  corporation;  nature  and  character  of  the 
business  to  be  carried  on  and  the  principal  place  in  which 
this  business  will  be  transacted.  No  restrictions  as  to  name. 
More  than  one  of  the  enumerated  purposes  may  be  included. 

(2)  Time  of  commencement  and  the  period  of  continuance, 
which  must  not  exceed  fifty  years. 

* References,  except  as  otherwise  noted,  are  to  Chapter  978,  32  U.  S.  Stat.  at 
Large. 


18 


ALASKA. 


19 


(3)  Amount  of  capital  stock,  how  the  same  shall  be  paid 
in,  and  number  and  par  value  of  shares. 

(4)  Highest  amount  of  corporate  indebtedness  or  liability 
that  may  be  incurred. 

(5)  Names  and  residences  of  the  incorporators. 

(6)  Names  of  members  of  the  first  board  of  directors, 
designation  of  the  officers  in  whom  the  government  of  the 
corporation  and  the  management  of  its  affairs  will  be  vested, 
when  the  same  shall  be  elected  and  their  terms  of  office. 

Filing  and  Recording.  One  copy  of  the  articles  of  incorporation 
is  filed  and  recorded  in  the  office  of  the  Secretary  of  the  District  of 
Alaska,  another  in  the  office  of  the  clerk  of  the  district  court  of  the 
recording  division  in  which  the  principal  place  of  business  of  the 
company  is  intended  to  be  located,  and  the  third  is  retained  by  the 
corporation.  § 2.  . 

4.  Organization. 

First  Meetings.  The  first  meetings  must  be  held  in  Alaska  (§§  6, 
9),  and  as  by-laws  must  be  adopted  within  one  month  after  filing  the 
articles  of  incorporation,  the  first  meeting  of  stockholders  must  be 
held  for  the  purpose  within  that  period.  § 16. 

Unless  otherwise  provided  in  the  articles  of  incorporation  or  by- 
laws, the  first  and  all  subsequent  meetings  of  the  directors  must  be 
called  by  one  or  more  persons  named  as  directors  in  the  certificate, 
or  their  successors,  by  notice  served  personally  on  the  resident  direc- 
tors and  published  at  least  twenty  days  in  a newspaper  at  or  nearest 
the  principal  place  of  business  of  the  corporation  and  in  Alaska.  § 9. 

By-Laws.  Must  be  adopted  within  one  month  after  filing  articles. 
§ 16.  M*ay  provide  for  notice  of  meetings  (§  6);  for  time,  manner  and 
amounts  of  payments  on  capital  stock  (§  10) ; for  method  of  trans- 
ferring stock  (Id.);  may  prescribe  the  powers  and  duties  of  officers 
(§  4,  subdivs.  e,  d)  and  generally  provide  for  the  regulation  and 
management  of  the  corporate  affairs.  § 4. 

Certificates.  Within  thirty  days  after  any  change  of  officers,  a 
certificate  thereof  is  required  to  be  filed  in  the  office  of  the  Clerk  of 
the  District  Court.  § 20. 

5.  Corporate  Existence. 

WThen  Commenced.  Commences  on  the  filing  and  recording  of 
articles  of  incorporation.  May  last  for  fifty  years.  §§  2,  4. 

Beginning  Business.  As  soon  as  articles  are  filed  business  may 
be  commenced.  § 4. 

Renewal.  No  provisions.  Corporations  continue  as  bodies  cor- 
porate after  expiration,  for  a period  of  three  years,  for  the  purpose  of 
closing  up  their  business.  § 22. 


20 


CLASSIFIED  CORPORATION  LAWS. 


Forfeiture  of  Charter.  Action  in  name  of  the  United  States  may- 
be brought  to  annul  corporate  existence  for  illegal  acts  or  for  non- 
user for  one  year,  or  for  violation  of  law  against  trusts.  Code  of 
Civ.  Pro.,  §§  337-350. 

Dissolution.  When  all  debts  are  paid  or  secured,  corporations 
may  dissolve  on  written  resolution  of  owners  of  two-thirds  of  the 
stock  at  a meeting  specially  called  for  that  purpose.  A copy  of  this 
resolution,  with  a certificate  signed  by  the  president  and  secretary  or 
corresponding  officers,  and  under  the  corporate  seal,  authenticating 
the  copy  of  resolution  and  setting  forth  the  facts  as  to  the  debts  of 
the  corporation  being  paid  or  secured,  the  whole  amount  of  the 
stock,  and  the  ownership  of  the  stock  voting  for  such  dissolution, 
shall  be  filed  and  recorded  in  the  same  manner  as  the  original  articles 
of  incorporation.  § 21.  Thereupon  the  corporation  ceases  to  exist, 
except  for  the  winding  up  of  its  affairs. 

6.  Corporate  Powers. 

General.  The  usual  common  law  powers  are  conferred.  § 4. 

To  Hold  Property.  Corporations  may  acquire  or  hold  only  such 
real  estate  as  may  be  necessary  to  carry  on  their  corporate  busi- 
ness. § 5. 

Its  Own  Stock.  No  statutory  provisions. 

Stock  of  Other  Corporations.  This  power  is  expressly 
withheld  by  the  statutes.  § 4,  subdiv.  c. 

To  Borrow  Money.  The  debts  or  liabilities  of  a corporation 
must  in  no  case  exceed  the  amount  of  its  capital  stock.  § 17. 

To  Do  Business  in  Other  States.  No  direct  restriction.  All  ob- 
jects and  powers  granted  by  the  law  are,  however,  expressly  limited 
to  Alaska.  §§  1,  4. 

Consolidation  or  Merger.  No  provisions. 

Amendment  of  Charter.  The  articles  of  incorporation  may  be 
amended  by  a majority  vote  of  the  stock  at  any  regular  meeting. 
Such  amended  articles  shall  be  executed  and  acknowledged  by  a 
majority  of  the  board  of  directors  and  shall  be  filed  and  recorded  in 
the  same  places  and  manner  as  the  original  articles.  § 2,  subdiv.  7. 
Special  provisions  govern  the  increase  or  decrease  of  capital  stock. 
§§  17-19.  (See  “Increase  or  Decrease”  under  § 7.) 

7.  Capital  Stock. 

Amount.  Initial  Payment.  No  provisions  as  to  either. 

Consideration  for  Issue.  Must  be  money,  labor  or  property  esti- 
mated at  its  true  money  value.  § 14. 

The  stockholders  may  in  the  by-laws  or  articles  of  incorporation 
prescribe  the  time,  manner  and  amounts  of  payments  on  the  capital 
stock.  If  not  so  prescribed,  directors  may  make  assessments  on 
sixty  days’  notice;  but  after  delivery  of  certificates,  no  call  can  be 


ALASKA. 


21 


made  for  more  than  ten  per  cent,  of  the  par  value  of  stock  at  any 
one  time,  and  not  oftener  than  once  in  thirty  days.  § io. 

Increase  or  Decrease.  May  be  effected,  provided  the  corporate 
indebtedness  remains  less  than  the  amount  to  which  the  capital  stock 
is  reduced  (§  17),  by  a vote  of  two-thirds  of  all  the  stock  at  a meeting 
called  for  that  purpose  by  a majority  of  the  directors,  by  notice 
published  weekly  at  least  eight  consecutive  weeks  in  a newspaper  at 
or  nearest  the  principal  place  of  business  in  Alaska,  which  notice 
must  state  the  time,  place  and  object  of  the  meeting,  and  the  amount 
to  which  it  is  proposed  to  raise  or  diminish  the  capital  stock.  A 
certificate  of  the  proceedings  at  this  meeting,  showing  also  the  origi- 
nal amount  of  the  capital  stock  actually  paid  in,  the  amount  of  the 
debts  and  liabilities  of  the  company  and  the  amount  to  which  the 
stock  is  increased  or  diminished,  is  made,  signed  and  acknowledged 
by  the  presiding  officer  and  secretary  of  the  meeting,  certified  by  a 
majority  of  the  directors,  and  filed  and  recorded  in  the  same  manner 
as  the  articles  of  incorporation.  § 18. 

Classes  of  Stock.  No  provisions. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  No  special  provisions. 

Transfer  of  Stock.  Is  to  be  made  as  prescribed  by  the  by-laws 
or  articles  of  incorporation;  but  to  be  valid  as  against  third  parties 
must  be  entered  on  the  books  of  the  corporation.  § 10.  Stock  may 
be  pledged  by  delivery  of  the  certificate,  but  the  stockholder  retains 
his  vote  on  such  pledged  stock.  § 12. 

8.  Stockholders. 

Rights  and  Powers.  They  may  in  the  by-laws  or  articles  of  in- 
corporation prescribe  the  manner  of  payment  of  capital  stock  and  in 
the  absence  of  such  provisions,  sixty  days’  notice  of  any  call  must 
be  given  personally  or  by  registered  mail. 

They  have  the  right  to  inspect  the  books  of  the  corporation  at 
reasonable  times.  § 16.  By  vote  of  two-thirds  of  the  stock  they  may 
increase  or  diminish  the  capital  stock,  effect  dissolution  or  remove 
directors.  §§  4,  17,  21.  By  a majority  vote  they  may  effect  any  other 
amendment  of  the  articles  of  incorporation.  §§  2-19. 

Liability.  Each  stockholder  is  personally  liable  to  the  creditors 
of  the  company  for  the  amount  that  remains  unpaid  on  the  par  value 
of  his  stock.  § 14. 

Meetings.  Must  be  held  annually  in  Alaska  for  the  election  of 
directors.  § 6.  Notice  may  be  regulated  by  by-laws  or  articles  of 
incorporation.  Id.  Quorum  is  to  be  a majority  of  all  the  stock.  Id. 
At  all  elections  of  directors  each  share  has  one  vote,  and  voting  must 
be  by  ballot.  Id.  Voting  may  be  by  proxy.  Id. 

9.  Directors. 

General.  Directors  may  be  removed  by  a two-thirds  vote  of 
the  stock.  § 4,  subdiv.  e.  Compensation  may  be  fixed  by  stoqkhold- 


22 


CLASSIFIED  CORPORATION  LAWS. 


ers.  § 4,  subdiv.  d.  But  an  annual  statement  is  required  to  be 
published  stating  such  compensation.  § 23.  (See  § 13,  “Reports.”) 

Number.  Must  be  not  less  than  three.  § 6. 

Qualifications.  They  must  be  stockholders  and  a majority  of 
them  must  be  residents  of  Alaska.  They  must  take  an  oath  in  writ- 
ing. § 6. 

Powers.  Are  to  be  defined  by  the  stockholders;  also  their  duties. 
Security  may  be  required  of  them.  § 4,  subdivs.  e,  d.  Vacancies 
among  the  directors  may  be  filled  by  the  board  for  the  unexpired 
term.  § 6.  They  remain  trustees  on  dissolution  or  expiration  sub- 
ject to  control  of  any  court  of  competent  jurisdiction.  § 22. 

Liability.  Directors  are  jointly  and  severally  liable  to  the  cor- 
poration and  to  its  creditors,  on  dissolution,  to  the  full  amount  of 
any  dividends  improperly  paid  and  any  capital  stock  improperly 
withdrawn  or  distributed  or  reduced,  unless  entering  their  dissent 
thereto,  or  unless  absent  from  the  meeting  where  any  such  action 
was  authorized.  § 13. 

Meetings.  No  provisions  permitting  meetings  without  the  Ter- 
ritory. Unless  otherwise  provided  by  the  articles  of  incorporation 
or  by-laws,  the  first  and  all  subsequent  meetings  of  directors  must  be 
called  by  notice  of  one  or  more  of  the  directors  delivered  personally 
to  directors  residing  in  Alaska,  and  published  at  least  twenty  days 
in  a newspaper  at  or  nearest  to  its  principal  place  of  business  in 
Alaska.  § 9.  A quorum  is  formed  by  a majority  of  the  whole  num- 
ber. § 8. 

Executive  Committee.  No  provisions. 

10.  Officers. 

A president,  secretary  and  treasurer  and  a cashier  or  managing 
agent  are  necessary  to  meet  the  requirements  of  the  law  as  to  reports 
and  service.  §§  20,  23.  Duties  are  to  be  prescribed  by  the  incorpora- 
tors or  stockholders.  Security  may  be  required.  § 4,  subdiv.  e,  d. 
They  must  file  and  publish  annual  statement.  § 23. 

11.  Principal  Office. 

Must  be  located  in  the  District  of  Alaska,  where  its  principal 
managing  officer  or  superintendent  must  also  reside.  § 16. 

12.  Corporate  Books. 

Every  corporation  must  keep  correct  and  complete  books  of 
account  and  record  of  its  proceedings,  including  election  of  officers. 
§ 16.  Also  stock  books  containing  the  names  of  stockholders  since  its 
organization,  their  places  of  residence,  amount  of  holdings,  amounts 
paid  and  dates  of  transfers.  All  these  must  be  kept  at  its  principal 
office,  and  shall  be  at  all  reasonable  times  open  to  the  inspection  of 
stockholders.  § 16. 


ALASKA. 


23 


13.  Reports. 

An  annual  statement  is  required  to  be  made  by  the  president, 
secretary  and  treasurer,  duly  signed  and  verified,  stating:  (1)  Number 
of  shares  of  capital  stock  outstanding;  (2)  Amount  paid  on  each  share 
of  stock;  (3)  Actual  paid  up  capital  of  the  corporation;  (4)  Actual 
cash  value  of  the  property  of  the  corporation  and  the  character, 
location  and  nature  of  the  same;  (5)  Debts  and  liabilities  of  the 
corporation  and  for  what  the  same  were  incurred,  and  whether  the 
same  are  secured  or  unsecured  and  the  amount  of  each  kind;  and  if 
secured,  the  character  and  kind  of  the  security;  (6)  Salaries  severally 
paid  each  and  every  officer,  manager  and  superintendent  of  the  cor- 
poration during  the  preceding  year;  (7)  Increase  or  decrease  of  any 
of  the  stock,  the  capital  and  the  liabilities  of  the  corporation  during 
the  preceding  year.  This  statement  must  be  published  weekly  for 
three  successive  weeks  in  a newspaper  of  general  circulation  in  the 
District  of  Alaska.  § 23. 

A list  of  the  officers  is  also  required  to  be  filed  on  or  before 
September  1st  of  each  year  in  the  office  of  the  Clerk  of  the  District 
Court  of  the  recording  division  in  which  the  principal  place  of  busi- 
ness of  the  corporation  is  located.  Also  a notice  of  any  change  of 
officer,  within  thirty  days  after  such  change.  § 20. 

Publication  must  be  made  of  annual  report  (§  23);  also  of  notices 
of  directors’  meetings  if  not  otherwise  provided  in  the  by-laws. 
§§  8,  23. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  All  corporations  organized 
under  the  laws  of  the  United  States  or  of  any  state  or  territory  of  the 
United  States,  must,  before  doing  business  within  the  District,  file 
in  the  office  of  the  Secretary  of  the  District  and  in  the  office  of  the 
Clerk  of  the  District  Court  for  the  division  wherein  they  intend  to 
carry  on  business,  a duly  authenticated  copy  of  their  charter  or  arti- 
cles of  incorporation,  and  also  a statement,  verified  by  the  oath  of 
the  president  and  secretary  of  such  corporation  and  attested  by  a 
majority  of  its  board  of  directors,  showing:  (1)  Name  of  the  cor- 
poration and  location  of  its  principal  office  or  place  of  business 
without  the  District;  and  if  it  is  to  have  any  place  of  business  or 
principal  office  within  the  District,  the  location  thereof.  (2)  Amount 
of  capital  stock.  (3)  Amount  of  its  capital  stock  actually  paid  in  in 
money.  (4)  Amount  of  its  capital  stock  paid  in  in  any  other  way 
and  in  what.  (5)  Amount  of  the  assets  of  the  corporation  and  of 
what  the  assets  consist,  with  actual  cash  value  thereof.  (6)  Liabili- 
ties of  such  corporation,  and  if  any  of  its  indebtedness  is  secured, 
how  secured,  and  upon  what  property. 

Also  a certificate  under  the  seal  of  the  corporation,  and  signature 
of  its  acting  head,  and  secretary  if  there  be  one,  consenting  that  the 
corporation  may  be  sued  in  the  courts  of  the  District  and  designating 
name  and  residence  of  a person  in  the  District  on  whom  process 
may  be  served,  and  whose  consent  to  act  as  such  agent  must  be  filed 
in  like  manner.  Civil  Code,  §§  225-226. 

Penalties  for  Non-Compliance.  Fine  of  $25  for  every  day  of 
neglect  to  file  the  above  papers.  Contracts  made  during  the  period 


24 


CLASSIFIED  CORPORATION  LAWS. 


(Alaska) 

of  such  non-compliance  are  voidable  at  the  election  of  the  other 
party  thereto.  Civil  Code,  § 228.  If  persisting  in  such  failure,  all  its 
contracts  are  void  and  can  not  be  enforced  in  the  courts  of  the 
District.  Id.,  § 231. 

Taxation.  Same  as  for  domestic  corporations. 

Books.  Not  prescribed. 

Reports.  Every  such  corporation  must  annually,  within  thirty 
days  after  July  1st  of  each  year,  make  and  file  a report,  in  the  same 
form  and  manner  and  containing  the  same  information  as  the  state- 
ment originally  filed  as  above  set  forth.  Civil  Code,  § 229. 

15.  Combinations  and  Monopolies. 

Alaska  is  subject  to  the  Federal  Statute  against  trusts.  26  U.  S. 
Stat.  at  Large,  p.  209,  July  2,  1890.  Violations  are  declared  misde- 
meanor, punishable  by  fine  not  exceeding  $5,000  and  imprisonment 
not  more  than  one  year;  property  may  be  forfeited  and  seized  on 
behalf  of  the  United  States,  and  persons  injured  may  recover  three- 
fold damages. 


ARIZONA. 


1.  Corporation  Laws.* 

Organic  Act.  Special  laws  granting  special  or  exclusive  privi- 
lege or  franchise  to  corporations  prohibited.  § 63.  Neither  the 
Territory  nor  any  municipal  corporation  or  other  subdivision  of  the 
Territory  shall  subscribe  to  capital  stock  of  private  corporation  nor 
lend  its  credit  to  corporation.  Id. 

Statutes.  Revised  Statutes,  1901,  Title  13,  contains  the  corpora- 
tion law,  of  which  Ch.  II  refers  to  domestic  and  Ch.  IX  to  foreign 
corporations  in  general;  Ch.  Ill  to  domestic  and  Ch.  IV  to  foreign 
insurance  companies;  Ch.  VI  to  savings  and  loan,  and  Ch.  VII  to 
railroad  corporations.  Ch.  VIII  refers  to  religious,  social  and  benevo- 
lent associations.  Amendments  are  found  in  L.  1903,  Chs.  29,  82  and 
88.  Taxation  is  covered  by  Title  62. 

Under  the  general  law  corporations  may  be  formed  for  any 
lawful  business.  § 764. 

2.  Taxes  and  Fees. 

Organization  Expenses.  No  organization  tax.  Fees  to  the 
Territorial  Auditor:  For  filing  articles  of  incorporation,  $10;  filing 

affidavit  of  publication  of  same,  $3;  filing  appointment  of  statutory 
agent,  $3;  for  issuing  certificate  of  filing  articles  of  incorporation, 
$3;  for  copy  of  any  document  on  file  in  his  office,  not  otherwise 
provided  for,  20  cents  per  folio;  for  affixing  seal  and  certificate  to 
copy,  $1.  L.  1903,  Ch.  29. 

Recorder’s  fees  are:  For  recording,  20  cents  per  folio  of  100 

words;  certifying  under  seal,  75  cents;  filing  fees,  20  cents.  § 2596. 
The  cost  of  publication  varies  from  $5  to  $15. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Shares  of  stock  are  not  taxable  (§  3837);  no 
specific  tax  required.  There  are  exemptions  for  nine  years  from 
date  of  the  Acts  (1903)  in  favor  of  property  used  for  the  purpose  of 
beet  sugar  factories  and  refineries  or  for  generating  and  transmitting 
electric  power.  L.  1903,  Chs.  27,  32. 

3.  Incorporation. 

Incorporators*  May  be  any  number  and  need  not  be  resi- 
dents. § 764. 

* References,  except  as  otherwise  noted,  are  to  the  Revised  Statutes  of  1901. 


25 


2 6 


CLASSIFIED  CORPORATION  LAWS. 


Articles  of  Incorporation.  Must  be  signed  and  acknowledged  by- 
incorporators  as  deeds  are  required  to  be  acknowledged  and  must 
contain  (§  766;  L.  1903,  Ch.  88): 

(1)  Name  of  incorporators,  name  of  corporation  and  prin- 
cipal place  of  transacting  business. 

(2)  General  nature  of  business.  Any  number  of  purposes 
may  be  included. 

(3)  Amount  of  capital  stock  authorized  and  the  time  when 
and  the  condition  upon  which  it  is  to  be  paid  in.  No  limi- 
tations as  to  amount  of  capitalization  or  par  value  of  shares. 

(4)  Time  of  commencement  and  termination  of  the  corpo- 
ration. Duration  must  not  exceed  twenty-five  years,  but  may 
be  renewed  by  three-fourths  vote  of  stock  for  another  similar 
period.  § 771. 

(5)  By  what  officers  the  corporate  affairs  are  to  be  con- 
ducted and  the  times  at  which  they  are  to  be  elected 

(6)  Highest  amount  of  corporate  indebtedness  or  liability 
that  may  be  incurred.  Must  not  exceed  two-thirds  of  the 
amount  of  the  capital  stock.  § 767. 

(7)  Whether  private  property  is  to  be  exempt  from  cor- 
porate debts.  Unless  so  exempted,  stockholders  are  liable 
for  the  debts  of  the  corporation  in  the  proportion  which 
their  stock  bears  to  the  whole  capital  stock. 

Special  charter  provisions  for  the  conduct  and  regulation  of  the 
corporate  affairs,  though  not  specifically  authorized  by  the  statutes, 
are  permitted  and  are  freely  inserted. 

Filing  and  Recording.  The  articles  of  incorporation  are  recorded 
in  the  office  of  the  County  Recorder  of  the  county  where  the  princi- 
pal place  of  business  is  to  be  located  (§  766);  and  a copy,  certified 
to  by  said  Recorder,  is  filed  with  and  recorded  by  the  Territorial 
Auditor.  § 767;  L.  1903,  Ch.  29. 

The  articles  of  incorporation  must  also  be  published  at  least  six 
times  in  a newspaper  of  the  county  in  which  the  corporation  is 
located,  and  an  affidavit  filed  in  the  office  of  the  Territorial  Auditor 
proving  such  publication.  § 768;  L.  1903,  Ch.  29.  This  affidavit  must 
be  filed  within  three  months  from  the  date  of  first  filing  of  the  articles 
of  incorporation.  § 769. 

4.  Organization. 

First  Meetings.  The  statutes  make  no  provision  for  meetings 
outside  the  Territory,  hence  stockholders’  meetings  must  be  held 
within,  unless  special  charter  provisions  authorize  such  meetings 
elsewhere.  At  their  first  meeting  the  stockholders  should  adopt  by- 
laws and — if  so  provided  by  the  charter — elect  officers.  L.  1903, 
Ch.  88. 

By-Laws.  No  provisions  as  to  by-laws  except  that  they  must 


Arizona. 


27 


not  be  inconsistent  with  the  Constitution  and  laws  of  the  United 
States  and  the  laws  of  the  Territory.  § 765. 

Certificates.  None  required  to  show  completed  organization  ex- 
cept the  filing  of  affidavit  of  publication  of  articles  of  incorporation. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  certified  copy  of  articles  of  in- 
corporation with  Territorial  Auditor  after  the  original  articles  have 
been  filed  with  Recorder  of  the  county  in  which  the  principal  place 
of  business  is  to  be  located.  §§  766,  769;  L.  1903,  Ch.  29.  Existence 
is  limited  to  twenty-five  years  (§  771),  but  continues  beyond  liquida- 
tion or  dissolution  for  the  purpose  of  closing  up  the  business.  § 775. 
Can  not  be  collaterally  questioned.  §§  779,  780. 

Beginning  Business.  May  be  commenced  forthwith,  and  the 
corporate  acts  be  valid,  provided  affidavit  of  publication  of  articles 
is  filed  within  three  months  from  date  of  first  filing  with  County 
Recorder.  § 769.  Must  be  commenced  within  five  years.  § 774. 

Renewal.  The  corporate  existence  may  be  renewed  for  another 
period  of  twenty-five  years  by  three-fourths  vote  of  the  stock  repre- 
sented at  a stockholders’  meeting  duly  called  for  that  purpose.  § 771. 

Forfeiture  of  Charter.  May  occur  on  non-user  for  five  years  at 
any  one  time,  § 774.  It  may  occur  also  on  failure  to  appoint  and 
maintain  a resident  agent  or  to  file  due  notice  of  such  appointment, 
or  on  disposal  of  all  the  corporate  assets.  L.  1903,  Ch.  82.  But  only 
by  regular  proceeding  brought  for  that  purpose.  §§  779,  780;  L. 
1903,  Ch.  82. 

Dissolution.  May  be  accomplished  by  a majority  vote  of  the 
members,  unless  a different  rule  is  adopted  in  the  articles.  § 772. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 765. 

To  Hold  Property.  The  right  is  conferred  in  general  terms. 
§ 765.  For  the  purpose  of  making  repairs,  building,  enlarging  or 
extending  works,  or  to  meet  contingencies,  or  for  the  purpose  of  pro- 
viding a sinking  fund  for  the  payment  of  debts,  the  corporation  may 
establish  a fund  and  loan  the  same  out  from  time  to  time,  taking  in 
all  cases  good  and  sufficient  security  for  the  payment  of  the  same. 
§ 777- 

Its  Own  Stock.  No  statutory  provision. 

Stock  of  Other  Corporations.  To  take  the  stock  or 
bonds  of  other  corporations  in  payment  of  debts  or  in  exchange  for 
a corporation’s  own  stock  or  bonds  is  made  a misdemeanor.  Penal 
Code,  § 504. 

To  Borrow  Money.  This  power  is  limited  to  two-thirds  of  the 
amount  of  the  capital  stock  (§  767),  and  the  highest  amount  of  in 


28 


CLASSIFIED  CORPORATION  LAWS. 


debtedness  to  be  incurred  within  this  limit  must  be  specified  in  the 
articles  of  incorporation.  L.  IQ03,  Ch.  88. 

To  Do  Business  in  Other  States.  This  power  is  implied,  but  not 

expressly  conferred. 

Consolidation  or  Merger.  No  provisions,  except  that  railroad 
companies  are  permitted  to  consolidate  under  certain  conditions. 
§ 864. 

Amendment  of  Charter.  May  be  had  by  vote  of  a majority  of 
the  stock;  three-fourths  vote  required  to  extend  corporate  existence. 
§ 771.  Any  such  amendment  must  be  signed  and  acknowledged  by 
the  president  and  attested  by  the  secretary,  and  recorded  and  pub- 
lished as  were  the  original  articles.  § 770;  L.  1903,  Ch.  88. 

7.  Capital  Stock. 

Amount.  Not  limited  by  statute,  but  must  be  specified  in  articles 
of  incorporation.  § 766;  L.  1903,  Ch.  88. 

Initial  Payment.  Not  prescribed  by  the  statute,  but  may  be 
specified  in  articles. 

Consideration  for  Issue.  May  be  specified  in  articles.  To  accept 
or  make  any  fictitious  subscriptions,  and  to  take  stocks  or  bonds  of 
other  corporations  in  payment  of  subscriptions,  is  a misdemeanor. 
Penal  Code,  §§  501,  504. 

Increase  or  Decrease.  May  be  effected  in  the  same  manner  as 
any  other  amendment,  provided  always  that  the  capital  stock  exceeds 
the  corporate  indebtedness  by  one-third.  § 770. 

Classes  of  Stock.  No  provisions. 

Par  Value  of  Shares.  No  restrictions. 

Stock  Certificates.  No  provisions.  May  be  provided  for  by  arti- 
cles of  incorporation  or  by-laws. 

Transfer  of  Stock.  Must  be  entered  on  the  books  of  the  com- 
pany. § 773. 

8.  Stockholders. 

Rights  and  Powers.  The  stockholders  control  amendments  by  a 
majority  vote  of  the  stock  (§  770),  dissolution  by  majority  vote  of 
the  members  (§  772),  and  renewal  of  existence  by  three-fourths  vote. 
§ 771.  They  have  full  right  to  examination  of  books,  papers  and 
records.  § 773;  Penal  Code,  § 509. 

Liability.  Stockholders  are  liable  to  the  amount  of  unpaid  in- 
stalments on  stock  owned  by  them;  and  to  that  extent  execution 
against  the  corporation  may  be  levied  upon  the  private  property  of 
stockholders.  § 776.  Unless  exemption  is  provided  for  in  articles  of 


ARIZONA. 


29 


incorporation,  the  stockholders  are  liable  for  the  debts  of  the  cor- 
poration in  the  proportion  which  their  stock  bears  to  the  whole  capital 
stock.  L.  1903,  Ch.  88. 

Meetings.  No  provisions.  Place,  notice,  quorum,  voting  and 
other  details  should  be  provided  for  in  the  articles  of  incorporation 
or  by-laws. 


9.  Directors. 

Number.  Qualifications  and  powers  may  be  fixed  by  articles  of 
incorporation  and  by-laws,  the  statutes  containing  no  provisions. 

Liability.  The  Penal  Code,  Ch.  XI,  §§  501-516,  contains  severe 
provisions  against  all  frauds  or  misdoings  of  directors  or  others  who 
have  direction  or  management  of  a corporation  (Id.,  § 516),  charging 
every  director  with  full  knowledge  (Id.,  § 512),  liability  to  be  avoided 
when  violation  appear  on  the  records,  even  when  absent  from  meet- 
ings, only  by  entering  dissent  in  writing  on  the  minutes,  or  by 
resigning.  Id.,  § 514.  Among  the  offences  enumerated  as  misde- 
meanors, are  payment  of  illegal  dividends,  unlawful  distribution  of 
stock;  to  take  notes  or  evidences  of  debt  in  payment  of  instalments 
on  stock;  to  receive  stock  of  other  corporations  or  its  bonds,  or  other 
evidence  of  indebtedness,  in  payment  or  exchange  for  its  own  stock, 
bonds  or  evidences  of  indebtedness.  Id.,  § 504. 

Meetings.  No  provisions.  May  be  regulated  by  by-laws.  § 765. 

Executive  Committee.  No  provision. 

10.  Officers. 

No  provisions*  as  to  number  or  titles.  They  are  to  be  designated 
and  times  of  elections  fixed  by  articles  of  incorporation.  L.  1903, 
Ch.  88. 

Refusal  to  allow  inspection  of  books,  falsifying  reports,  books, 
etc.,  are  declared  misdemeanors.  Penal  Code,  §§  505-510.  (See  also 
“ Liability  ” under  § 9,  “ Directors.”) 

11.  Principal  Office. 

A principal  office  must  be  maintained  within  the  Territory,  which 
must  be  designated  in  the  articles  of  incorporation,  also  an  agent, 
who  must  be  a bona  fide  resident  of  the  Territory  for  at  least  three 
years  last  past,  on  whom  process  may  be  served.  Notice  of  his  ap- 
pointment must  be  filed  with  the  Territorial  Auditor.  § 783;  L. 
1903,  Ch.  82. 

12.  Corporate  Books. 

A stock  transfer  book  must  be  kept.  It  must  show  by  and  to 
whom  transfers  are  made,  the  number  of  shares  and  date  of  transfer; 
also  the  original  stockholders  and  their  addresses,  the  amount  paid 
in  on  their  stock  and  all  transfers  of  same.  § 773. 


30  CLASSIFIED  CORPORATION  LAWS. 

(Arizona) 

Where  Kept.  Not  prescribed. 

Examination  of.  The  stock  transfer  book  must  be  at  all  times 
open  to  inspection  of  stockholders  (§  773);  also  all  other  books, 
papers  and  documents  must,  on  demand,  be  submitted  to  the  inspec- 
tion of  stockholders  during  office  hours,  and  copies  may  be  made 
therefrom.  Refusal  is  declared  a misdemeanor  by  Penal  Code,  § 509. 
Books  must  be  produced  on  order  of  court.  § 778. 

13.  Reports. 

None  required. 

Publication  is  required  of  original  articles  of  incorporation,  and 
of  all  amendments,  for  six  times  in  some  newspaper  published  in  the 
county  in  which  the  principal  place  of  business  is  located  or  works 
established.  §§  768,  770;  L.  1903,  Ch.  88. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Before  doing  any  business 
within  the  Territory  foreign  corporations  must  file  a duly  authenti- 
cated copy  of  their  articles  of  incorporation  or  charter  and  the 
appointment  of  a resident  agent,  with  the  Territorial  Auditor,  and 
with  the  Recorder  of  each  county  in  which  business  is  to  be  carried 
on.  They  must  also  publish  a copy  of  the  articles  of  incorporation 
six  times  in  a newspaper  published  in  each  of  the  counties  in  which 
it  is  intended  to  carry  on  business,  and  must  file  an  affidavit  of  such 
publication  with  the  Territorial  Auditor.  § 909. 

An  agent  must  be  appointed  for  each  county  in  which  the  cor- 
poration intends  to  carry  on  business,  who  must  be  a bona  fide  resi- 
dent of  the  county  and  of  the  Territory  for  at  least  three  years,  and 
the  full  name  and  residence  of  each  must  be  stated  in  the  appointment. 
§ 910.  The  appointment  must  be  signed  by  the  president  and  attested 
by  the  secretary,  or  by  a resolution  of  the  board  of  directors.  Id. 
Fees  are  the  same  as  of  domestic  corporations.  L.  1903,  Ch.  29. 
Except  for  mining  or  manufacturing  purposes  their  holdings  of  real 
estate  in  the  Territory  are  limited  to  320  acres.  § 913. 

Penalties  for  Non-Compliance.  Inability  to  transact  business  in 
the  Territory,  all  acts  and  contracts  being  declared  null  and  void  at 
option  of  any  person  interested.  § 912. 

Taxation.  No  annual  franchise  tax.  No  special  provisions  as  to 
local  taxation. 

Books  and  Reports.  Not  prescribed. 

Attachments  Against.  Issues  on  the  ground  of  being  a foreign 
corporation.  § 332. 

15.  Combinations  and  Monopolies. 

Are  not  provided  against  by  special  laws  of  the  Territory,  but 
strict  penal  provisions  exist  against  acquiring  stock  or  bonds  of 
other  corporations.  Penal  Code,  § 504. 


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V 


ARKANSAS. 


i.  Corporation  Laws.* 

Constitution.  (1874.)  Corporations  not  to  be  created  by  special 
laws,  except  educational,  charitable,  or  reformatory  corporations 
which  remain  under  control  of  the  State.  Art.  XII,  §§  2,  6.  No 
stock  or  bonds  to  be  issued  except  for  money  or  property  actually 
received,  or  labor  done.  All  fictitious  increase  of  stock  or  indebted- 
ness to  be  void,  and  neither  to  be  increased  except  on  consent  of  a 
majority  of  the  stock  at  a meeting  held  after  at  least  sixty  days’ 
notice  in  pursuance  of  law.  Id.,  § 8.  Foreign  corporations  doing 
business  in  State  must  maintain  known  offices  with  agents  in  charge, 
must  be  subject  to  the  laws  prescribed  for  domestic  corporations  and 
can  enjoy  no  greater  rights  or  privileges.  Id.,  § 11.  Laws  may  be 
passed  exempting  from  taxation  capital  invested  in  mining  and  manu- 
facturing in  the  State.  Art.  X,  § 3.  Consolidation  in  any  manner 
of  competing  lines  prohibited.  Art.  XVII,  § 4.  “ Perpetuities  and 

monopolies  are  contrary  to  the  genius  of  a republic  and  shall  not 
be  allowed.”  Art.  II,  § 19. 

Statutes.  The  corporation  law  of  Arkansas  is  found  in  Sandels 
& Hill’s  Digest  of  Statutes,  1894,  Ch.  47,  with  numerous  amendments 
in  subsequent  Session  Laws.  Under  this  law  corporations  may  be 
formed  for  any  lawful  business.  § 1326.  Part  I of  Ch.  47  treats  of 
foreign  corporations,  Part  II  of  manufacturing  and  other  corpora- 
tions, and  Parts  VIII  and  IX  of  insolvency  and  dissolution.  The 
intervening  sections  treat  specially  of  navigation,  turnpike,  and  plank 
road,  educational,  benevolent,  and  other  corporations.  Ch.  88  treats 
specially  of  insurance,  Ch.  129  of  rafting  and  booming  companies, 
and  Ch.  130  of  railroads. 


2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  For  filing  arti- 
cles of  incorporation  and  issuing  charter,  on  capital  stock  of  $25,000 
or  under,  $30,  and  $5  for  each  additional  $25,000.  Act  of  May  6,  1905. 
For  copies,  15  cents  per  folio,  and  for  affixing  Great  Seal  of  State  or 
official  seal,  $1.  § 3299.  To  County  Clerk,  recording  fee,  10  cents 

per  folio.  § 1345. 

Franchise  Tax.  None  imposed. 

* References  given,  unless  otherwise  noted,  are  to  Sandels  & Hill’s  Digest,  1894. 


31 


32 


CLASSIFIED  CORPORATION  LAWS. 


Local  Taxation.  As  for  individuals.  Stock  of  corporation  is 
assessed  on  actual  value.  § 1337.  (See  § 13,  “ Reports.”) 

General.  To  Secretary  of  State,  for  filing  and  recording  each 
amendment  or  supplement  to  articles  of  incorporation,  $10.  § 3299. 

To  County  Clerk,  10  cents  per  folio  for  recording.  § 1345.  Publica- 
tion of  amendments  and  notices,  at  varying  rates.  §§  1327,  1343. 

3.  Incorporation. 

Incorporators.  Any  number  of  persons  not  less  than  three. 
§ 1326.  No  residential  requirements. 

Formation. 

1.  Articles  of  Incorporation.  Must  be  signed  by  each  of 
the  incorporators  (§  1334),  and  in  accordance  with  the  charter 
form  issued  by  the  Secretary  of  State,  should  contain: 

(1)  Name  of  corporation.  No  restrictions. 

(2)  Names  of  incorporators. 

(3)  Location  of  place  of  business  and  office  of  the  com- 
pany within  the  State. 

(4)  General  nature  of  the  business.  § 1328. 

(5)  Amount  of  the  capital  stock  and  amount  thereof  sub- 
scribed by  the  incorporators.  § 1327.  A provision  is  added 
that  the  residue  thereof  may  be  issued  and  disposed  of  as 
the  board  of  directors  may  from  time  to  time  order  and 
direct.  No  limitations  as  to  amount  of  capital  stock. 

(6)  Number  and  par  value  of  shares,  which  must  be  $25 
unless  increased  by  action  of  the  stockholders.  § 1327.  (See 
§ 7,  “ Capital  Stock.”) 

(7)  Number  of  directors,  not  less  than  three  (§  1330),  who 
must  be  stockholders.  Provision  is  also  added  that  the  board 
shall  elect  a president  and  vice-president  from  its  membership 
and  shall  also  elect  a secretary  and  treasurer.  § 1332. 

(8)  Provision  that  first  election  of  directors  shall  be  held 
immediately  after  the  organization  of  the  corporation,  and 
that  said  directors  shall  serve  for  one  year  and  until  their 
successors  are  elected. 

(9)  Authorization  to  directors  to  ordain  and  establish  all 
by-laws  and  regulations  necessary  to  the  management  and 
business  of  the  corporation,  and  alter  and  repeal  the  same  at 
pleasure. 

(10)  Time,  place  and  waiver  of  notice  of  organization 
meeting. 

2.  First  Meetings.  The  incorporators  meet  at  the  time  ap- 
pointed by  the  articles  of  incorporation  and  organize  the  corpora- 


ARKANSAS. 


33 


tion,  electing  the  first  board  of  directors  and  adopting  by-laws 
if  they  see  fit.  The  directors  meet,  elect  a president  and  vice- 
president  from  their  number,  and  also  elect  a secretary  and 
treasurer  and  such  other  officers  as  the  by-laws  require.  § 1329. 

3.  Certificate  of  Organization.  The  president  and  a majority 

of  the  directors  then  sign  and  acknowledge  a certificate  setting 
forth  the  facts  as  to  the  meetings  of  incorporators  and  directors 
and  stating  the  names  of  the  directors  and  officers  elected;  and 
further:  (1)  The  purposes  of  the  corporation.  (2)  Its  capital 

stock  and  par  value  of  shares.  (3)  The  amount  actually  paid  in 
by  the  subscribers  to  its  stock.  (4)  The  names  of  the  stock- 
holders and  the  number  of  shares  owned  by  them  respectively. 
§ 1334- 

4.  Filing  and  Recording.  The  articles  of  incorporation  and 
certificate  of  organization  as  described  are  filed  and  recorded 
with  the  County  Clerk  of  the  county  in  which  the  corporation 
is  to  have  its  principal  place  of  business,  and  also  duplicates 
thereof,  with  the  endorsement  of  said  County  Clerk,  in  the  office 
of  the  Secretary  of  State.  On  such  filing,  and  on  payment  of 
the  fees  required  by  law,  the  Secretary  of  State  issues  to  the 
incorporators  a certificate  of  authority.  L.  1903,  Act  18. 


4.  Organization. 

First  Meetings.  (See  “ First  Meetings  ” under  “ Formation,”  § 3.) 
Time  and  place  of  stockholders’  meeting  is  appointed  in  articles  of’ 
incorporation,  which  also  may  contain  a waiver  of  notice  thereof. 
But  such  meeting  may  also  be  called  by  any  two  of  the  incorporators, 
by  notice  published  in  or  near  the  county  of  its  principal  office,  at 
least  fifteen  days  prior  thereto.  Notice  may  be  waived  in  writing  on 
record  by  all  the  subscribers.  § 1329. 

Officers  are  to  be  elected  by  the  directors  immediately  after  their 
own  election.  § 1 332. 

By-Laws.  Full  power  to  make,  amend  and  repeal  may  be  dele- 
gated to  the  directors  in  the  articles  of  incorporation. 

Certificates.  (See  “ Formation  ” under  § 3.)  Within  thirty  days 
after  payment  of  each  instalment  of  capital  stock  certificate  thereof 
must  be  filed  with  the  Secretary  of  State  and  a duplicate  with  the 
clerk  of  the  home  county.  § 1334. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  of  authority  by 
Secretary  of  State.  L.  1903,  Act  18;  Garnett  v.  Richardson,  35  Ark. 
144.  Is  not  limited  by  law,  nor  required  to  be  stated  in  incorporation 
papers.  (See  § 3,  “ Incorporation.”)  Can  not  be  collaterally  attack- 
ed. Searcy,  Town  of,  v.  Yarnell,  4 7 Ark.  269. 

Beginning  Business.  The  corporate  business  can  not  be  com- 
pienced  until  issuance  of  (certificate  by  Secretary  of  State,  the  courts 


34 


CLASSIFIED  CORPORATION  LAWS. 


having  distinguished  sharply  between  acts  of  incorporators  and  acts 
of  the  corporation.  L.  R.  & F.  S.  R.  R.  Co.  v.  Perry,  37  Ark.  164. 

Renewal.  No  limitation  of  period  of  existence,  therefore  no 
provision  for  its  extension  or  renewal. 

Forfeiture  of  Charter.  May  occur  for  non-user  or  misuser,  but 
only  by  judicial  procedure.  Searcy,  Town  of,  v.  Yarnell,  47  Ark.  269; 
Blackwell  v.  State,  36  Ark.  178.  Charter  may  be  forfeited  for  viola- 
tion of  laws  against  combinations  and  trusts.  L.  1899,  Act  41,  § 3. 

Dissolution.  Charters  may  be  surrendered  by  resolution  adopted 
by  a majority  in  value  of  the  stock,  a certified  copy  of  which  reso- 
lution is  to  be  filed  in  the  office  of  the  Secretary  of  State  and  a copy 
in  the  office  of  the  County  Clerk  of  the  county  in  which  the  corpora- 
tion was  organized.  § 1433.  Also  by  application  by-  the  stockholders 
or  creditors  to  a court  having  equitable  jurisdiction.  §§  1430-1434. 
On  dissolution  or  forfeiture,  the  assets  vest  in  the  State  in  trust 
(§  1429)  for  distribution  by  chancery  court.  §§  1430-1434. 


6.  Corporate  Powers. 

General.  The  usual  powers  are  specified.  §§  1339,  1340.  It  is 
also  stated  that  the  purposes  of  the  corporation  shall  be  distinctly 
specified  in  the  articles  of  incorporation,  and  that  “ it  shall  not  be 
lawful  for  said  corporation  to  direct  its  operations  or  appropriate  its 
funds  for  any  other  purpose.”  §§  1328,  1343. 

To  Hold  Property.  So  far  as  necessary  for  its  purposes,  or  such 
as  is  taken  in  payment  of  or  as  security  for  debts.  § 1340. 

Its  Own  Stock.  Stock  of  Other  Corporations.  No 

provisions. 

To  Borrow  Money.  No  limitations  beyond  the  constitutional 
provisions  that  bonds  may  not  be  issued  except  for  money  or  prop- 
erty actually  received;  all  fictitious  increase  of  indebtedness  is  void, 
and  indebtedness  may  not  be  increased  except  on  consent  of  the 
majority  in  value  of  the  stock  given  at  a meeting  held  on  notice  of 
sixty  days.  Const.,  Art.  XII,  § 8. 

To  Do  Business  in  Other  States.  No  provisions. 

Consolidation  or  Merger.  No  provisions. 

Amendment  of  Charter.  Articles  of  incorporation  may  be 
amended  by  the  specification  of  any  other  lawful  business  in  which 
the  stockholders  may  desire  to  engage,  the  amended  articles  to  specify 
the  purpose  for  which  the  corporation  is  formed,  to  be  subscribed 
and  verified  by  all  the  stockholders  and  published  in  a newspaper  in 
the  county  in  which  the  corporation  is  located,  or  an  adjoining 
county.  Such  amended  statement  of  purposes  must  also  be  certified 
and  filed  in  the  same  manner  as  the  original  articles.  § 1343.  Capital 
stock  may  be  increased  or  reduced  and  par  value  of  shares  increased 
by  action  of  the  stockholders.  § 1327.  (See  § 7,  “ Capital  Stock.”) 
Also  name  of  corporation  and  number  of  directors  may  be  changed. 
L.  1901,  Act  99. 


ARKANSAS. 


35 


7.  Capital  Stock. 

Amount.  Is  not  limited  by  the  statute.  Must  be  stated  in  arti- 
cles of  incorporation. 

Initial  Payment.  Is  not  prescribed  by  law,  but  must  be  stated 
in  certificate  of  organization  (§  1334)  and  subsequent  payments  in 
annual  reports.  § 1337.  And  within  thirty  days  after  payment  of 
each  instalment,  certificate  thereof  must  be  filed  and  recorded  in  same 
manner  as  original  certificate.  § 1334. 

Consideration  for  Issue.  Must  be  money  or  property  actually 
received,  or  labor  done.  Const.,  Art.  XII,  § 8.  Subscriptions  to  stock 
are  called  in  by  the  directors  in  such  instalments  and  at  such  times 
and  places  as  they  shall  think  proper,  but  on  notice  as  prescribed  by 
the  by-laws  (§  1336),  and  the  corporation  may  proceed  to  sue  delin- 
quent stockholders  for  such  instalments,  or  may  sell  stock  at  public 
auction,  on  three  weeks’  notice  published  in  newspaper.  §§  1352-1355. 

Increase  or  Decrease.  The  capital  stock  may  be  increased  at  a 
meeting  of  the  stockholders  called  for  that  purpose  (§  1327)  after 
notice  of  at  least  sixty  days  (Const.,  Art.  XII,  § 8),  on  a consenting 
vote  of  the  persons  holding  the  larger  amount  in  value  of  the  stock. 
Within  thirty  days  thereafter  the  president  and  directors  are  required 
to  make  a certificate  of  such  increase,  which  shall  be  signed,  verified, 
deposited  and  recorded  as  were  the  original  articles.  § 1344. 

Reduction  may  be  accomplished  in  the  same  manner  if  it  can  be 
done  without  impairing  the  rights  of  creditors.  L.  1895,  Act  15. 

Classes  of  Stock.  Issue  of  preferred  stock  is  authorized.  Act 
261,  Laws  of  1905. 

Par  Value  of  Shares.  Must  be  $25,  but  may  be  increased  by 
action  of  the  stockholders.  § 1327.  Shares  of  railroad  companies 
must  be  $100  each.  § 6300. 

Stock  Certificates.  No  provisions. 

Transfer  of  Stock.  Must  be  made  on  the  books  of  the  company 
in  such  form  as  the  directors  may  prescribe.  § 1342.  All  transfers 
of  stock  must  be  certified  to  and  recorded  by  the  County  Clerk  of 
the  county  in  which  the  corporation  transacts  its  business,  and  no 
transfer  of  stock  is  valid  as  against  creditors  of  the  stockholders  until 
so  evidenced.  § 1338. 

8.  Stockholders. 

Rights  and  Powers.  A majority  vote  of  the  stockholders  is  re- 
quired for  all  amendments  of  the  articles  of  incorporation  (§§  1327, 
I343)>  and  to  increase  or  create  mortgage  debts.  Const.,  Art.  XII,  § 8. 
They  have  the  right  of  access  to  the  books  of  the  corporation  and 
are  entitled  to  an  annual  statement  of  its  accounts.  § 1341.  Unani- 
mous consent  is  required  to  dispose  of  all  the  assets  of  a corporation. 
Searcy,  Town  of,  v.  Yarnell,  47  Ark.  269. 

Liability.  “ If  the  capital  stock  of  any  corporation  be  withdrawn 
or  refunded  to  the  stockholders  before  the  payment  of  the  debts  of 


36 


CLASSIFIED  CORPORATION  LAWS. 


the  corporation  for  which  such  stock  would  have  been  liable,  the 
stockholders  shall  be  liable  to  any  creditor  of  such  corporation  in  an 
action  founded  on  the  statute,  to  the  amount  of  the  sum  refunded 
to  them  respectively,”  with  right  of  contribution  against  the  other 
stockholders.  § 1348;  Fletcher  v.  Bank  of  Lonoke,  7 1 Ark.  1;  Wilkins 
v.  Worthen,  62  Ark.  401. 

Meetings.  No  provisions  for  meetings  to  be  held  without  the 
State.  Time  and  place  of  annual  meetings  are  to  be  fixed  by  by-laws. 
§ 1330.  Notice  is  not  prescribed  except  for  special  purposes.  A 
majority  constitutes  a quorum.  § 1335. 

Voting.  Stockholders  have  one  vote  for  each  share  of  stock 
held.  § 1335.  No  provisions  as  to  proxies. 

9.  Directors. 

Number.  Must  be  not  less  than  three.  Must  be  elected  annually 
by  the  stockholders  and  hold  office  until  their  successors  are  elected. 
§ 1330.  If  not  elected  at  annual  meeting,  must  be  elected  within  the 
year.  § 1331.  Number  may  be  changed  by  the  stockholders  in  the 
same  manner  as  any  other  amendment  to  the  charter  is  made.  L. 
1901,  Act  99. 

Qualifications.  Must  be  stockholders  (§  1330),  but  need  not  be 
residents.  Compensation  to  be  fixed  by  stockholders.  § 1339. 

Powers.  They  may  fill  a vacancy  in  the  board  for  the  year. 
§ J333-  They  have  the  usual  powers  of  management  of  the  corporate 
property  and  affairs. 

Liability.  The  directors  assenting  to  any  payment  of  dividends 
when  corporation  is  insolvent,  or  which  renders  it  insolvent,  make 
themselves  jointly  and  severally  liable  for  all  the  debts  of  the  cor- 
poration at  the  time  of  such  dividend.  § 1349.  So  also  for  intentional 
neglect  or  refusal  to  comply  with  the  provisions  of  the  corporation 
laws.  §§  1350,  1351;  Simon  v.  Sevier  Assn.,  54  Ark.  58. 

Meetings.  No  statutory  provision  as  to  place.  Should  be  fixed 
by  by-laws.  In  absence  of  special  directions  in  statutes,  in  by-laws 
or  articles  of  incorporation,  notice  must  be  personally  served.  Bank 
of  L.  R.  v.  McCarthy,  55  Ark.  473;  Simon  v.  Sevier  Assn.,  54  Ark.  58. 
A majority  constitutes  a quorum.  § 1335. 

Executive  Committee.  No  statutory  provision. 

10.  Officers. 

General.  A president,  who  must  be  a director,  and  a secretary 
and  treasurer  are  prescribed  by  the  statutes,  and  such  other  officers 
as  the  by-laws  may  provide.  The  secretary  and  treasurer  must  be 
residents  of  the  State  and  keep  the  books  of  the  corporation  within 
the  State.  § 1332.  The  president  and  secretary  must  file  annual 
statement  (§  1337)  and  furnish  list  of  employees  to  tax  officers  on 
demand.  L.  1903,  Act  142. 

Liability.  For  failure  to  make  and  file  annual  report  the  presi- 
dent and  secretary  become  jointly  and  severally  liable  for  all  the 


ARKANSAS. 


37 


debts  of  the  corporation  contracted  during  the  period  of  such  neglect 
or  refusal.  §§  1337,  1347-  For  swearing  falsely  to  any  material  state- 
ments they  are  liable  for  perjury.  § 1346.  (See  § 9,  “ Directors.”) 


11.  Principal  Office. 

The  secretary  and  treasurer  must  reside  and  have  their  place  of 
business  in  the  State.  § 1332.  Certain  formalities  and  publication 
are  required  to  change  the  principal  place  of  business.  § 1357- 


12.  Corporate  Books. 

Books  of  account  must  be  kept  in  the  county  where  the  corpora- 
tion is  located,  or  at  the  office  of  the  treasurer  in  the  State.  § 1341. 
Stock  transfer  books  to  be  prescribed  by  the  directors  are  provided 
for  by  § 1342.  Secretary  and  treasurer  must  keep  the  corporate 
books  in  the  State.  § 1332. 

Examination  of.  The  books  are  to  be  open  to  the  inspection 
and  examination  of  the  stockholders  (§  1341),  and  as  often  as  once 
in  each  year  a true  statement  of  the  accounts  of  said  corporation 
shall  be  made  and  exhibited  to  the  stockholders  by  order  of  the 
directors.  § 1341. 

13.  Reports. 

The  president  and  secretary  must  annually  make  and  verify  a 
certificate  showing  the  condition  of  the  affairs  of  the  corporation  on 
the  first  of  January  or  of  July  next  preceding  the  term  of  making 
such  certificate,  showing:  (1)  Amount  of  capital  actually  paid  in. 

(2)  Cash  value  of  its  real  estate.  (3)  Cash  value  of  its  personal 
estate.  (4)  Cash  value  of  its  credits.  (5)  Amount  of  its  debts. 
(6)  Name  and  number  of  shares  of  each  stockholder.  § 1337.  This 
certificate  is  deposited  on  or  before  February  15  or  August  15  with 
the  County  Clerk  of  the  county  in  which  the  corporation  transacts  its 
business  and  is  recorded  by  him.  Id.  Also,  on  demand  of  Secretary 
of  State,  on  or  about  July  1st  of  each  year,  an  affidavit  must  be  made 
by  any  officer  of  the  corporation  that  it  has  not  been  and  is  not 
guilty  of  any  violation  of  anti-trust  laws.  L.  1899,  Act  41;  Nebraska 
Nat.  Bk.  v.  Walsh,  68  Ark.  433;  59  S.  W.  952  (1900).  A list  of  the 
corporation’s  employees  must  also  be  furnished  on  demand  to  the  tax 
officers  of  the  county.  L.  1903,  Act  142. 

Also  during  the  month  of  March  a statement  must  be  filed  with 
the  assessor  of  the  county  where  the  corporation  is  located,  of  its 
capital,  sworn  to  by  one  of  its  chief  officers,  and  showing:  (1)  Name 
and  location  of  the  company.  (2)  Amount  of  capital  stock  authorized 
and  number  of  shares  into  which  it  is  divided.  (3)  Amount  of  capital 
stock  paid  up,  its  market  value,  or  if  none,  actual  value.  (4)  Total 
amount  of  indebtedness,  except  current  expenses,  not  including  per- 
manent improvements  or  purchase  of  property.  (5)  True  valuation 
of  all  tangible  property.  § 6462.  Assessor  sends  out  notice  ten  days 
before  June  30th  to  return  such  schedule  on  or  before  July  31st,  and 
failure  to  make  such  return  is  declared  a misdemeanor,  punishable 
by  fine  not  over  $100  and  imprisonment  not  over  three  months,  and 
fifty  per  cent,  added  to  tax.  § 6463. 


38 


CLASSIFIED  CORPORATION  LAWS. 


(Arkansas) 

Publication  of  certain  amendments  must  be  made,  such  as  reduc- 
tion of  stock  (§  1327),  change  of  business  (§  1343),  removal  of  office, 
etc.  § 1357.  Publication  of  notices  may  be  avoided  by  provision  of 
the  by-laws. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation 
must,  by  its  certificate,  under  the  corporate  seal  and  signed  by  the 
president,  file  with  the  Secretary  of  State  and  with  the  Clerk  of  the 
county  in  which  it  has  opened  an  office,  a copy  of  its  articles  of 
incorporation  (L.  1901,  Act  216),  and  also  with  the  Secretary  of  State, 
a certificate  designating  an  agent,  a citizen  of  the  State,  on  whom 
process  may  be  served  (§  1323);  and  also,  within  six  months  after 
the  establishment  of  such  office  or  commencing  business,  with  both 
of  said  officers,  a statement  showing  the  proportional  part  of  its 
capital  stock  in  use  both  in  the  State  and  in  the  county  in  which  it 
is  doing  business.  L.  1901,  Act  216.  Fees  are  the  same  as  of  domes- 
tic corporations.  Act  of  May  6,  1905.  For  certificate  designating 
agent,  $1.  § 3299.  In  case  agent  is  not  designated  as  provided,  ser- 

vice of  process  may  be  made  on  Auditor  of  State.  L.  1901,  Act  23. 

Penalties  for  Non-Compliance.  Inability  to  make  or  sue  on  con- 
tracts in  the  State.  § 1324;  L.  1901,  Act  216;  White  River  Lumber  Co. 
v.  Assn.,  55  Ark.  625. 

t 

Taxation.  No  license  tax  is  provided.  Other  taxation  is  the 
same  as  of  domestic  corporations. 

Books.  No  provisions. 

Reports.  Foreign  corporations  are  expressly  included  in  the 
provisions  of  the  anti-trust  law  (L.  1899,  Act  41),  and  the  same  annual 
affidavit  is  required  as  of  domestic  corporations.  They  are  also 
subjected  to  all  the  penalties  imposed  on  domestic  corporations  by 
L.  1899,  Act  19,  § 2.  Under  Const.,  Art.  XII,  §11,  they  also  have  to 
file  the  other  annual  reports  required  of  domestic  corporations. 
§ 1337;  L.  1903,  Act  142;  Woodson  v.  State,  69  Ark.  521. 

Attachments  Against.  Issue  on  the  ground  of  being  a foreign 
corporation.  § 325,  subdiv.  1. 

15.  Combinations  and  Monopolies. 

Provision  is  made  against  combinations,  trust  pools  or  con- 
spiracies of  corporations,  to  control  prices  or  rates,  on  penalty  of 
forfeiture  of  charters  and  fine  from  $500  to  $2,000  (L.  1899,  Act  41), 
and  the  Secretary  of  State  is  required  to  address  a letter  of  inquiry, 
on  or  about  July  1st  of  each  year,  to  the  officers  of  every  corporation, 
and  to  require  an  affidavit,  the  form  of  which  he  is  to  supply  (as 
given  in  the  statute),  verified  by  any  officer  of  the  corporation,  show- 
ing that  it  has  not  been  guilty  of  any  violation  of  the  act.  Id.,  § 4. 

A penalty  of  fine  of  from  $200  to  $1,000  is  prescribed  for  dis- 
crimination in  prices  of  manufactured  products,  coal  oil  and  dressed 
beef  in  the  State.  L.  1903,  Act  183. 


CALIFORNIA.* 

Enactments  of  1906. 


3.  Incorporation. 

Filing  and  Recording.  When  articles  of  incorporation  are  de- 
stroyed by  fire  or  other  public  calamity,  a copy  of  the  certified  copy 
filed  with  the  Secretary  of  State,  may,  if  certified  by  him,  be  filed  in 
office  of  county  clerk  and  shall  then  have  the  same  effect  as  the  copy 
destroyed.  L.  1906,  Ch.  61,  p.  83. 

12.  Corporate  Books. 

When  Destroyed.  When  corporate  books,  records,  stock  certifi- 
cates or  bonds,  or  the  corporate  seal  are  destroyed  by  fire  or  other 
public  calamity,  procedure  is  prescribed  wherein  a decree  of  court  may 
be  had,  directing  the  corporation  to  restore  such  lost  records,  etc.,  and 
to  issue  new  bonds  or  certificates  to  the  persons  entitled  thereto. 
L.  1906,  Ch.  63,  p.  84. 

* Special  Session  of  Legislature. 


• \ 


CALIFORNIA. 


1.  Corporation  Laws.* 

Constitution.  (1879.)  Corporations  not  to  be  created  by  special 
act.  Art.  XII,  § 1.  A stockholder  is  individually  and  personally  liable 
in  the  proportion  his  holding  bears  to  the  total  subscribed  capital 
for  all  corporate  debts  incurred  during  the  time  he  holds  stock. 
Id.,  § 3.  Directors  are  liable  for  embezzlements  or  misappropriations 
by  officers.  Id.,  § 3.  A corporation  may  only  engage  in  such  busi- 
ness as  is  expressly  authorized  by  its  charter.  Id.,  § 9.  May  not 
hold  real  estate  for  a longer  period  than  live  years  except  such  as 
may  be  necessary  in  carrying  on  its  business.  Id.,  § 9.  No  stock  or 
bonds  to  be  issued  except  for  money  paid,  labor  done  or  property 
actually  received;  fictitious  increase  of  stock  or  bonds  to  be  void; 
stock  or  bonded  indebtedness  to  be  increased  only  in  pursuance  of 
general  law  and  with  the  consent  of  a majority  of  the  stock  expressed 
at  a meeting  called  on  sixty  days’  notice.  Id.,  §11.  Cumulative  vot- 
ing prescribed  for  elections  of  directors.  Id.,  § 12.  State  ownership 
or  interest  in  any  corporation  prohibited.  Id.,  § 13. 

Statutes.  The  general  corporation  law  is  contained  in  Civil 
Code  1901,  Division  First,  Part  IV,  Title  I,  §§  283-407.  Under  this 
Title  private  corporations  may  be  formed  for  any  purpose  for  which 
individuals  may  lawfully  associate  themselves.  § 286.  Titles  II-XX 
treat  specially  of  insurance,  railway,  street  railway,  wagon  road, 
bridge,  ferry,  wharf,  chute  and  pier,  telegraph  and  telephone,  water 
and  canal,  homestead,  savings  and  loan,  mining,  gas,  eleemosynary 
and  other  similar  corporations.  Co-operative  associations  are  pro- 
vided for  by  Laws  of  1905,  Ch.  437.  Numerous  amendments  are 
found  in  Laws  of  1903  and  1905. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  For  filing  articles 
of  incorporation  when  capital  stock  is  not  over  $25,000,  $15;  over 
$25,000  but  not  over  $75,000,  $25;  over  $75,000  but  not  over  $200,000, 
$50;  over  $200,000  but  not  over  $500,000,  $75;  over  $500,000  but  not 
over  $1,000,000,  $100;  over  $1,000,000,  $50  additional  for  every  $500,000 
or  fractional  part  thereof  in  excess  of  $1,000,000.  L.  1905,  Ch.  467. 

For  recording  articles  of  incorporation,  20  cents  per  folio  (100 
words) ; for  issuing  certificate  of  incorporation,  $3.  If  copies  of 
the  articles  of  association  or  certificate  are  desired,  the  fees  to  Secre- 
tary of  State  are  20  cents  per  folio  for  copying  and  $2  for  affixing 
Seal  of  State.  Pol.  Code,  § 416. 

* Except  where  otherwise  noted,  references  are  to  the  Civil  Code  of  1901. 

39 


40 


CLASSIFIED  CORPORATION  LAWS. 


The  fees  to  County  Clerk  are  $1  for  filing  articles  of  incor- 
poration, io  cents  per  folio  for  copy  thereof  and  50  cents  for  certificate 
to  same.  General  Laws  1879,  Title  84. 

Franchise  Tax.  $10  per  annum  payable  to  Secretary  of  State 
between  the  first  Mondays  of  July  and  August  of  each  year.  L.  1905, 
Ch.  386. 

Local  Taxation.  Same  as  for  individuals.  Shares  of  stock  are 
not  taxed.  Pol.  Code,  § 3608.  Corporate  property  is  taxed  at  its 
actual  cash  value.  No  fixed  rate.  Fiscal  year  commences  January  1st. 
Assessments  made  first  Monday  in  March.  Burke  v.  Badlam,  57  Cal. 
594;  Spring  Valley  W.  W.  v.  Schottler,  62  Cal.  69. 

General.  A tax  of  10  cents  is  levied  by  the  State  upon  each 
certificate  of  stock  issued. 

The  State  fee  on  filing  certificate  of  increased  capital  is  $5  for 
every  $50,000  or  fraction  thereof  of  such  increase.  On  filing  certificate 
of  decrease,  to  Secretary  of  State,  $5. 

Fee  to  Secretary  of  State  for  filing  other  certificates  of  amend- 
ment, etc.,  $5,  and  for  issuance  of  any  certificate,  $3.  L.  1905,  Ch.  467. 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more,  a majority  of  whom  must 
be  residents  of  the  State.  L.  1905,  Ch.  392. 

Articles  of  Incorporation.  (§  289.)  Must  be  subscribed  and  ac- 
knowledged by  each  of  the  incorporators  (§  292;  People  v.  Company, 
97  Cal.  276),  and  must  set  forth: 

(1)  Name  of  the  corporation,  which  must  not  be  the  same 
as  nor  so  closely  resembling  the  name  of  any  existing  cor- 
poration as  to  tend  to  deceive.  The  use  of  the  word  “trust” 
in  a corporate  name  is  prohibited  to  all  corporations  not 
incorporated  as  trust  companies.  § 296;  L.  1905,  Chs.  103,  259, 
279,  290,  392. 

(2)  Purpose  for  which  it  is  formed.  No  corporation 
shall  engage  in  any  business  other  than  that  expressly  auth- 
orized by  its  charter.  Const.,  Art.  XII,  § 9. 

(3)  Place  where  its  principal  business  is  to  be  transacted. 
Must  be  within  the  State. 

(4)  Term  for  which  it  is  to  exist,  not  exceeding  fifty  years. 

(5)  Number  of  its  directors  or  trustees,  which  shall  not 
be  less  than  three,  and  the  names  and  residences  of  those 
who  are  appointed  for  the  first  year.  L.  1905,  Ch.  392.  A 
majority  of  the  directors  must  be  residents  of  the  State. 
Directors  must  be  stockholders. 

(6)  Amount  of  capital  stock,  the  number  of  shares  into 
wMch  it  is  divided,  the  amount  actually  subscribed  and  by 


CALIFORNIA. 


41 


whom.  § 290.  The  capital  stock  may  be  any  desired  amount. 
Par  value  of  shares  not  prescribed.  No  requirements  as  to 
amount  subscribed. 

Filing  and  Recording.  The  articles  of  incorporation  are  filed  in 
the  office  of  the  County  Clerk  of  the  county  in  which  the  principal 
business  of  the  company  is  to  be  transacted,  and  a copy  thereof,  cer- 
tified by  the  County  Clerk  and  accompanied  by  the  proper  fees,  is 
filed  with  the  Secretary  of  State,  whereupon  the  latter  officer  issues 
a certificate  of  incorporation,  over  the  Great  Seal  of  the  State.  § 296. 
A certified  copy  of  the  articles  of  incorporation  must  also  be  filed  in 
the  Clerk’s  office  of  every  county  in  which  the  corporation  holds 
property  within  sixty  days  after  such  property  is  acquired.  § 299; 
L.  1905,  Ch.  416;  Bank  v.  Tibbits,  80  Cal.  68. 


4.  Organization. 

First  Meetings.  The  first  meeting  of  stockholders  must  be  held 
in  the  State  within  one  month  after  incorporation  for  adoption  of 
by-laws.  A majority  vote  of  all  subscribed  stock  is  necessary  to 
adopt  by-laws,  but  they  may  also  be  adopted  by  written  assent  of 
two-thirds  of  the  stock,  without  a meeting.  § 301.  Voting  may  be 
by  proxy. 

The  first  directors’  meeting  would  naturally  closely  follow  the 
first  meeting  of  stockholders  for  the  purpose  of  electing  officers  and 
beginning  the  corporate  operations.  Such  early  meeting  is  not,  how- 
ever, required  by  statute,  one  year  being  allowed  for  commence- 
ment of  the  corporate  business.  § 358. 

No  amount  is  specified  for  initial  payment  on  stock  subscriptions, 
and  the  first  directors  may  therefore  qualify  by  nominal  holdings,  if 
dummy  directors  are  desired. 

By-Laws.  May  provide  for:  (1)  The  time,  place  and  manner 

of  meetings  and  may  dispense  with  notice  of  all  regular  meetings  of 
stockholders  and  directors.  (2)  The  number  of  stockholders  con- 
stituting a quorum.  (3)  The  mode  of  voting  by  proxy.  (4)  Quali- 
fications and  duties  of  directors,  time  of  annual  election  and  mode 
and  manner  of  notice  thereof.  (5)  Compensation  and  duties  of  offi- 
cers. (6)  Manner  of  election  and  term  of  office  of  all  officers  other 
than  directors.  (7)  Suitable  penalties  for  violation  of  by-laws,  not 
to  exceed  $100.  (8)  The  newspaper  in  which  all  notices  of  stock- 

holders’ and  directors’  meetings  shall  be  published,  which  must  be 
in  the  county  in  which  the  principal  place  of  business  of  the  com- 
pany is  located,  or  an  adjoining  county,  changes  thereof,  however,  to 
be  under  the  control  of  the  directors.  § 303. 

The  by-laws  must  be  certified  by  a majority  of  the  directors  and 
the  secretary,  and  be  recorded  in  the  “Book  of  By-Laws,”  which  is  to 
be  open  to  the  public.  By-laws  may  be  amended,  repealed  or  added 
to  by  assent  of  two-thirds  of  the  stock,  expressed  by  vote  at  a meet- 
ing, or  otherwise  in  writing;  but  this  power  may  also  by  such  assent 
be  delegated  to  the  directors.  § 304;  L.  1905,  Ch.  416. 

Certificates.  None  are  required  to  show  completed  organization. 


42 


CLASSIFIED  CORPORATION  LAWS. 


5.  Corporate  Existence. 

When  Commenced.  On  the  issuance  of  certificate  of  authority 
by  the  Secretary  of  State.  § 296.  Is  in  no  case  to  exceed  fifty  years. 
§§  290,  362.  Can  not  be  collaterally  inquired  into.  § 358. 

Beginning  Business.  May  be  commenced  on  such  issuance  of 
certificate,  and  must  be  commenced  within  one  year  from  incorpora- 
tion under  penalty  of  forfeiture  of  charter.  § 358;  People  v.  Co., 
45  Cal.  306. 

Renewal.  Every  corporation  formed  for  a period  of  less  than 
fifty  years  may,  at  any  time,  prior  to  the  expiration  thereof,  extend 
its  term  of  existence  to  a period  not  exceeding  fifty  years  from  its 
time  of  formation.  This  must  be  authorized  either  by  a two-thirds 
vote  of  the  stock  at  a meeting  called  expressly  for  that  purpose  by 
the  directors,  or  by  the  written  assent  of  stockholders  holding  that 
amount  of  stock.  A certificate  of  the  proceedings  or  assent  is  signed 
by  the  chairman  and  secretary  of  the  meeting  and  a majority  of  the 
directors,  and  filed  in  the  office  of  the  County  Clerk  where  the  original 
articles  were  filed,  and  a certified  copy  is  filed  with  the  Secretary  of 
State.  § 401,  as  amended  by  L.  1905,  Ch.  418.  It  is  to  be  noted  that 
under  the  provisions  of  a proposed  amendment  of  § 7,  Art.  XII  of 
the  Constitution,  already  adopted  by  the  State  Senate  and  shortly  to 
be  submitted  to  popular  vote,  extension  of  the  corporate  existence 
is  permitted  any  time  prior  to  its  expiration,  for  a period  not  exceed- 
ing fifty  years  from  the  date  of  extension.  L.  1905,  p.  1071. 

Forfeiture  of  Charter.  Failure  to  begin  business  within  one  year 
from  date  of  incorporation,  or,  thereafter,  the  loss  or  disposal  of  all 
the  corporate  property,  together  with  failure  to  elect  officers  and 
transact  business  for  two  years,  renders  the  corporation  liable  to 
forfeiture  of  its  charter  on  suit  of  the  State.  § 358.  Ten  successive 
years  of  bona  fide  corporate  existence  exempts  a corporation  from 
such  action. 

Forfeiture  of  charter  may  occur  also  on  failure  to  pay  annual 
license  tax.  L.  1905,  Ch.  386.  Continuing  to  do  business  after 
proper  action  has  been  taken  by  Secretary  of  State  is  made  a misde- 
meanor. Id.,  § 9. 

The  Legislature  and  State  officers  have  power  to  examine  into 
the  books  and  the  affairs  of  corporations.  §§  382-384. 

Dissolution.  May  be  had  by  an  application  to  Superior  Court 
of  the  county  where  the  principal  place  of  business  is  situated,  such 
application  to  be  signed  by  a majority  of  the  directors,  and  to  show: 
(1)  that  the  dissolution  has  been  resolved  upon  by  a two-thirds  vote 
of  the  stockholders  at  a meeting  called  for  that  purpose;  (2)  that  all 
claims  and  demands  against  the  corporation  have  been  satisfied. 
Notice  of  application  is  published  not  less  than  thirty  nor  more  than 
fifty  days,  or  if  there  is  no  newspaper  in  the  county,  is  posted  in 
three  public  places  for  the  same  length  of  time.  Code  Civ.  Pro., 
§§  1227-1233. 

6 Corporate  Powers. 

General.  The  usual  corporate  powers  are  enumerated.  § 354. 
The  powers  of  corporations  in  addition  thereto  are  limited  to  such 


CALIFORNIA. 


43 


as  are  necessary  to  the  exercise  of  the  powers  enumerated  or  given 
and  the  conduct  of  the  corporate  business.  § 355.  Special  limita- 
tions of  the  usual  powers  are  given  below.  California,  etc.  Co.  v.  Co., 
22  Cal.  398;  Knowles  v.  Sandercock,  107  Cal.  629;  Union  Water  Co. 
v.  Co.,  22  Cal.  620. 

To  Hold  Property.  Corporations  are  empowered  “to  purchase, 
hold  and  convey  such  real  and  personal  estate  as  the  purposes  of 
the  corporation  may  require.”  § 354,  subdiv.  4.  No  corporation 
shall  acquire  or  hold  any  more  real  property  than  may  be  reasonably 
necessary  for  the  transaction  of  its  business  or  construction  of  its 
works.  Directors  may  acquire  by  unanimous  vote  the  land  and 
building  on  and  in  which  the  business  is  carried  on.  § 360.  Property 
in  foreign  countries  may  be  conveyed  with  the  assent  of  two-thirds 
in  amount  of  the  capital  stock  and  a majority  of  the  directors.  § 364. 
Mining  companies  may  purchase  or  sell  mining  ground  only  with 
the  assent  of  two-thirds  of  the  capital  stock,  such  assent  to  be  attached 
to  the  deed  or  mortgage.  § 584. 

Its  Own  Stock.  May  purchase  its  own  stock  when  sold 
for  delinquent  assessments.  § 343.  All  purchases  of  its  own  stock 
vest  the  legal  title  to  same  in  the  corporation,  subject  to  the  control 
of  a majority  of  the  remaining  shares.  § 344;  Robinson  v.  Mining  Co., 
72  Cal.  32;  Bank  v.  Wickersham,  99  Cal.  655. 

Stock  of  Other  Corporations.  No  such  power  is  given 
by  the  statutes  either  expressly  or  by  implication.  Knowles  v.  Sander- 
cock, 107  Cal.  629. 

To  Borrow  Money.  No  corporation  shall  issue  stock  or  bonds 
except  for  money  paid,  labor  done  or  property  actually  received,  and 
all  fictitious  increase  of  stock  or  indebtedness  is  void.  § 359;  Const., 
Art.  XII,  § 11. 

Bonded  indebtedness  may  be  created  or  increased  by  a vote  of 
two-thirds  of  the  subscribed  capital  stock,  at  a meeting  called  by  the 
directors,  on  notice  published  once  a week  for  sixty  days  in  a news- 
paper designated  by  the  directors  in  the  order  calling  the  meeting; 
such  newspaper  to  be  published  in  the  county  where  the  principal 
place  of  business  is  located,  or  an  adjoining  county;  said  notice  stat- 
ing time,  place  and  object  of  the  meeting  and  the  amount  of  indebted- 
ness or  increase  to  be  created.  Said  notice  must  also  be  mailed  to 
each  stockholder  at  least  thirty  days  before  the  meeting.  A certificate, 
showing  compliance  with  the  law,  the  amount  of  indebtedness  or 
increase  thereof,  the  amount  of  stock  represented  at  the  meeting  and 
the  whole  vote  thereat,  is  signed  by  the  chairman  and  secretary  of 
the  meeting  and  a majority  of  the  directors,  and  is  filed  with  the 
County  Clerk  where  the  original  articles  were  filed,  and  a certified 
copy  filed  with  the  Secretary  of  State.  § 359,  as  amended  by  L.  1903, 
Ch.  253;  Const.,  Art.  XII,  § 11. 

Corporate  indebtedness  may,  however,  if  properly  notified  to  the 
stockholders,  be  created  without  publication,  on  the  written  assent  of 
two-thirds  in  interest  of  the  stockholders  and  the  unanimous  vote 
of  the  directors.  L.  1903,  Ch.  253,  subdiv.  5.  Amount  of  corporate 
indebtedness  must  never  exceed  the  amount  of  the  capital  stock. 
Id.,  subdiv.  2,  5. 

To  Do  Business  in  Other  States.  This  power  is  implied  by  § 364, 
providing  for  sale  of  property  owned  'by  a domestic  corporation  in 


44 


CLASSIFIED  CORPORATION  LAWS. 


a foreign  country,  by  a majority  vote  of  the  entire  board  of  directors 
concurred  in  by  two-thirds  of  the  voting  stock.  Mining  companies 
are  permitted  to  have  transfer  agencies  without  the  State  but  in  the 
United  States.  § 586. 

Consolidation  or  Merger.  Mining  corporations  owning  adjoining 
mining  claims  may  consolidate  under  the  provisions  of  § 587a,  pre- 
scribing a written  consent  of  two-thirds  of  the  stock  of  each  cor- 
poration, and  proper  publication  both  in  the  counties  where  mining 
claims  are  located  and  where  the  corporations  have  their  principal 
places  of  business.  A certificate  of  the  consolidation,  signed  by  a 
majority  of  the  directors  of  each  company,  and  containing  all  the 
items  prescribed  for  original  articles  of  association  in  § 290  (See  § 3, 
“Articles  of  Incorporation”),  is  filed  with  the  County  Clerk  of  each 
county  in  which  any  of  the  consolidating  companies  was  incorporated 
and  a copy  thereof  is  filed  with  the  Secretary  of  State.  Within  thirty 
days  of  such  filing  a meeting  of  all  the  stockholders  must  be  held, 
on  ten  days’  public  notice,  to  elect  a board  of  directors  for  the  ensu- 
ing year. 

Railroad  and  co-operative  corporations  may  also  consolidate. 
§ 473;  L.  1905,  Ch.  437,  §§  653!,  653J. 

Amendment  of  Charter.  General  charter  amendments  may  be 
made  by  a majority  vote  of  the  board  of  directors  concurred  in  by 
the  vote  or  written  assent  of  stockholders  representing  at  least  two- 
thirds  of  the  subscribed  capital  stock;  a copy  of  the  amended  articles, 
certified  by  the  president  and  secretary  or  the  board  of  directors,  to 
be  filed  as  were  the  original  articles  of  association.  § 362,  as  amended 
by  L.  1905,  Ch.  576.  If  the  assent  of  two-thirds  of  said  stockholders 
has  not  been  obtained,  a notice  of  the  intention  to  make  such  amend- 
ment must  be  advertised  for  thirty  days  in  a newspaper  in  the  city  or 
county  where  the  principal  place  of  business  of  the  corporation  is 
located.  L.  1903,  Ch.  285. 

The  corporate  name  may  be  changed  by  petition  to  the  Superior 
Court,  a certified  copy  of  the  decree  changing  the  name  to  be  filed 
with  the  Secretary  of  State.  L.  1903,  Ch.  219;  L.  1905,  Chs.  45,  103. 

For  amendment  extending  period  of  corporate  existence,  see 
under  § 5,  “Corporate  Existence”;  for  increase  or  decrease  of  capital 
stock,  see  under  § 7,  “Capital  Stock”;  for  change  of  location,  see 
L.  1903,  Chs.  216,  219,  253. 

7.  Capital  Stock. 

Amount.  Not  limited,  either  as  to  minimum  or  maximum. 

Initial  Payment.  No  requirements. 

Consideration  for  Issue.  Must  be  money  paid,  labor  done  or 
property  actually  received.  § 359,  as  amended  by  L.  1903,  Ch.  253, 
§ 309;  Const.,  Art.  XII,  § 11;  Jefferson  v.  Hewitt,  103  Cal.  624;  Keller- 
man  v.  Maier,  116  Cal.  416;  Green  v.  Co.,  96  Cal.  322.* 

Assessments.  May  be  levied  by  the  directors  after  one-fourth 
of  the  capital  stock  has  been  subscribed.  § 331.  As  to  limitations 
on  assessments,  see  §§  332,  333.  Proceedings  for  sale  on  default  in 
payment  set  out  in  detail.  §§  334-349;  L.  1903,  Ch.  215. 


California. 


45 


Increase  or  Decrease.  Increase  of  capital  stock  is  accomplished 
in  exactly  the  same  manner  as  prescribed  for  creating  or  increasing 
bonded  indebtedness  (§  359,  as  amended  by  L.  1903,  Ch.  253)  (See 
under  § 6,  “Corporate  Powers”),  but  every  fictitious  increase  is  void. 
Const.,  Art.  XII,  § 11. 

It  may  be  diminished  on  written  assent  of  two-thirds  of  the  stock- 
holders and  unanimous  resolution  of  the  directors,  with  due  notice 
given  to  all  the  stockholders  (L.  1903,  Ch.  253,  subdiv.  5),  but  it 
must  not  be  decreased  so  as  to  be  less  than  the  corporate  debts. 
§ 359,  subdiv.  2;  L.  1903,  Ch.  253. 

Classes  of  Stock.  No  statutory  provisions. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Are  signed  by  the  president  and  secretary. 
Of  mining  companies  issued  at  a transfer  agency  without  the  State 
are  countersigned  by  transfer  agent.  § 587.  Must  be  issued  to  stock- 
holders whose  subscriptions  are  fully  paid  up,  and  may  be  issued 
prior  to  full  payment  if  the  by-laws  so  provide.  If  issued  before 
full  payment,  the  certificate  must  show  on  its  face  the  amount  paid 
thereon.  § 323,  as  amended  by  L.  1905,  Ch.  339. 

Transfer  of  Stock.  May  be  made  by  endorsement  and  delivery 
of  certificate  but  is  not  valid  as  against  third  parties  until  entered 
on  the  books  of  the  corporation.  § 324.  May  be  transferred  by  min- 
ing corporations  at  transfer  agencies  in  other  states.  § 586. 

8.  Stockholders. 

Rights  and  Powers.  Any  amendment  of  charter,  or  transfer  or 
mortgaging  of  real  estate,  or  sale  of  entire  assets  must  be  authorized 
by  a twro-thirds  vote  of  the  stockholders.  § 359;  L.  1903,  Ch.  371. 
Stockholders  may  remove  directors  by  two-thirds  vote  of  the  stock 
at  a meeting  (§  310),  which  may  be  called  by  one-half  of  the  stock. 
Three  stockholders  may  apply  to  justice  of  the  peace  for  warrant 
on  which  to  call  meeting.  § 311;  L.  1905,  Ch.  416.  May  examine 
books  of  mining  corporations.  § 588.  May  inspect  mines.  § 589. 

Liability.  Each  stockholder  is  individually  liable  for  such  pro- 
portion of  the  corporate  debts  contracted  or  incurred  while  he  was 
a stockholder,  as  the  amount  of  stock  or  shares  owned  by  him 
bears  to  the  whole  of  the  subscribed  capital  stock.  § 322;  Const., 
Art.  XII,  § 3;  Knowles  v.  Sandercock,  107  Cal.  629;  Faymonville  v. 
McCullough,  59  Cal.  285;  Kennedy  v.  Bank,  97  Cal.  93;  L.  1905,  Ch. 
339- 

This  liability  is  primary  and  original  and  not  that  of  guarantor 
or  surety.  Bank  v.  Hill,  59  Cal.  107;  Mitchell  v.  Beckman,  64  Cal.  117. 

Meetings.  Must  be  held  at  the  corporation’s  office  or  principal 
place  of  business.  § 319.  Unless  by-laws  provide  for  time  of  election, 
it  must  be  held  the  first  Tuesday  of  June.  § 302;  L.  1905,  Ch.  416. 

Notice.  Must  regularly  be  given  by  advertisement  for  two  weeks 
in  a newspaper  published  in  the  county  in  which  corporation’s  prin- 
cipal place  of  business  is  located,  or  in  an  adjoining  county.  § 301. 


4 6 


CLASSIFIED  CORPORATION  LAWS. 


But  this  may  be  dispensed  with  by  provision  therefor  in  the  by-laws, 
and  if  all  the  stockholders  are  present  at  any  meeting  and  sign  a 
written  consent  on  the  record,  no  notice  of  such  meeting  is  required 
(§  3J7),  and  they  may  then  act  as  at  a regular  meeting.  The  Con- 
stitution (Art.  XII,  § n)  prescribes  sixty  days’  notice  for  meetings 
to  increase  stock  or  indebtedness.  § 318.  Meeting  may  be  called  on 
warrant  issued  by  justice  of  peace.  § 31 1;  L.  1905,  Ch.  416,  § 6. 

Quorum.  A majority  of  the  subscribed  stock  constitutes  a 
quorum.  § 312;  L.  1905,  Ch.  416,  § 7. 

Voting.  In  election  of  directors  must  be  by  ballot;  may  be  by 
proxy.  §§  307,  312;  as  to  proxies,  see  Constitution,  Art.  XII,  § 12; 
Bank  v.  Superior  Court,  104  Cal.  649;  L.  1903,  Ch.  215.  A proxy 
is  not  valid  eleven  months  after  its  date  unless  a longer  period  not 
exceeding  seven  years  be  stated  therein.  § 321b;  L.  1905,  Ch.  28. 
Cumulative  voting  is  prescribed  for  election  of  directors.  § 307; 
Const.,  Art.  XII,  § 12;  L.  1903,  Ch.  215.  Stock  to  be  voted  must 
have  stood  in  the  name  of  the  voter  on  the  books  of  the  company 
at  least  ten  days  before  the  meeting.  § 312. 


9.  Directors. 

Number.  May  be  any  number  not  less  than  three.  §§  290,  305, 
as  amended  by  L.  1905,  Ch.  392.  Number  may  be  changed  by  a 
majority  of  the  stockholders.  § 290,  as  amended  by  L.  1905,  Ch.  392. 
May  be  removed  by  a two-thirds  vote  of  the  stock  (§  310)  at  a meet- 
ing called  either  by  the  president,  by  a majority  of  the  directors,  or 
by  one-half  of  the  stock,  such  call  being  directed  to  the  secretary, 
who  must  send  out  notice  as  prescribed  in  Civil  Code,  § 301,  for 
regular  stockholders’  meetings.  (See  under  § 8,  “Stockholders’  Meet- 
ings.”) If  there  is  no  secretary,  or  he  refuses  to  act,  the  notice  may 
be  sent  directly  to  the  stockholders.  § 310,  as  amended  by  L.  1905, 
Ch.  416,  § 5. 

Qualifications.  Directors  must  be  stockholders  and  a majority 
of  them  must  be  residents  of  the  State.  The  requisite  holding  of 
stock  may  be  prescribed  by  the  by-laws.  §§  290,  305;  L.  1905,  Ch.  392. 
Compensation  may  be  prescribed  by  by-laws  or  by  stockholders 
direct.  Wickersham  v.  Crittenden,  93  Cal.  17. 

Powers.  Directors  have  general  power  to  manage  the  affairs  of 
the  corporation  subject  to  the  provisions  of  the  by-laws,  which  are 
in  the  control  of  the  stockholders.  Such  control  may  be  delegated 
to  the  directors  but  only  by  special  vote,  and  such  delegation  is  re- 
vocable by  like  vote.  By  unanimous  vote  they  may  acquire  and  con- 
trol real  estate  for  business  purposes.  § 360. 

Directors  continue  as  trustees  after  dissolution  of  the  corpora- 
tion with  full  power  to  settle  its  affairs.  § 400,  as  amended  by  L.  1905, 
Ch.  418. 

Liability.  The  directors  are  jointly  and  severally  liable  to  the 
creditors  and  stockholders  for  all  moneys  embezzled  or  misappropri- 
ated by  the  officers  during  such  directors’  term  of  office  (Const., 
Art.  XII,  § 3);  also  for  any  dividends  improperly  paid,  and  capital 
stock  improperly  increased  or  decreased  or  withdrawn  or  divided, 
and  for  debts  increased  beyond  the  subscribed  capital  stock.  But 


CALIFORNIA. 


47 


those  directors  who  entered  their  dissent  on  the  records  or  were 
absent  at  the  time  such  acts  were  done  are  exempt  from  liability 
therefor.  § 309;  L.  1905,  Chs.  416,  522. 

Under  the  Penal  Code,  §§  560,  563,  564,  568-572,  directors  are 
made  liable  for  fraud  and  false  reports,  etc.,  such  acts  being  declared 
felonies,  and  every  director  present  is  deemed  to  have  concurred 
unless  he  causes  his  dissent  to  be  entered  on  the  minutes,  and,  if 
not  present,  is  deemed  to  have  concurred  if  the  facts  appear  of 
record  and  he  remains  a director  for  six  months  thereafter  without 
causing  his  dissent  to  be  entered  on  the  minutes.  P.  C.,  §§  569,  570. 

Any  agreement  by  which  the  liability  under  Art.  XII,  § 3 of  the 
Constitution,  as  stated  above,  is  sought  to  be  avoided,  is  declared 
void.  § 327. 

Meetings.  Must  be  held  at  the  corporation’s  office  or  principal 
place  of  business.  § 319.  If  not  otherwise  provided  in  the  by-laws, 
notice  of  meeting  must  be  given  in  writing  to  each  director  by  the 
secretary,  on  the  order  of  the  president  or  of  two  directors.  § 320. 
Quorum  is  a majority.  § 308.  “Unless  a quorum  is  present  and 
acting  no  business  performed  or  act  done  is  valid  as  against  the 
corporation.”  § 305. 

Executive  Committee.  May  be  prescribed  by  by-laws.  § 303. 

10.  Officers. 

General.  The  officers  and  their  duties  are  to  be  prescribed  by 
the  by-laws.  § 303.  Their  names  and  residences  must  be  shown 
on  the  books  of  the  company  at  its  principal  office  in  the  State. 
Const.,  Art.  XII,  § 14. 

Officers  responsible  for  any  report,  public  notice  or  record  which 
is  false,  are  jointly  and  severally  liable  in  damages  to  any  person 
injured  thereby.  § 316.  Issuing  or  making  any  such  report,  public 
notice  or  record  is  made  felony,  and  is  punishable  by  imprisonment 
of  two  years  and  fine,  not  to  exceed  $5,000.  L.  1905,  Chs.  522,  583. 

The  Penal  Code,  §§  558,  563-565,  also  contains  provisions  for 
similar  offences,  and  for  refusal  to  allow  inspection  of  books.  § 565. 

11.  Principal  Office. 

A principal  office  is  to  be  maintained  within  the  State,  where 
transfers  of  stock  must  be  made.  Const.,  Art.  XII,  § 14.  Mining 
companies  are  permitted  to  have  transfer  agencies  without  the  State. 
§ 586.  The  principal  office  may  be  changed  only  by  amendment  of 
the  articles  of  association.  § 321a;  L.  1903,  Ch.  216. 

12.  Corporate  Books. 

What  Required.  Stock  and  transfer  books  are  prescribed,  to 
show  amount  of  capital  stock  subscribed  and  by  whom,  names  of 
stockholders  and  amount  owned  by  each,  amount  of  stock  paid  in  and 
by  whom,  transfers  of  stock;  also  the  corporate  assets  and  liabilities, 
and  the  names  and  residences  of  the  officers.  Const.,  Art.  XII,  § 14. 
Also  a “Book  of  By-Laws”  must  be  kept.  § 304.  A record  book  is 


48 


CLASSIFIED  CORPORATION  LAWS. 


prescribed  in  detail.  § 377.  Account  and  stock  books  must  be  kept 
by  mining  companies.  § 588. 

Where  Kept.  Books  are  to  be  kept  at  the  principal  office  within 
the  State.  §§  304,  588;  Const.,  Art.  XII,  § 14;  Knowles  v.  Sandercock, 
107  Cal.  629.  Transfer  agencies  without  the  State  are  allowed  for 
mining  companies.  § 586. 

Examination  of.  The  stock  and  transfer  books  are  to  be  open 
for  inspection  by  every  person  having  an  interest  therein  and  by 
legislative  committees.  §§  377,  378;  Const.,  Art.  XII,  § 14.  The  book 
of  by-laws  is  to  be  open  to  the  inspection  of  the  public  during  office 
hours  of  each  day,  except  holidays.  § 304. 

All  books  are  open  to  State  officers  and  Legislature;  also  officers 
are  liable  to  examination  as  to  corporate  affairs.  §§  382-384. 

13.  Reports. 

No  annual  reports  are  required,  except  tax  returns  by  certain 
corporations. 

Publication  of  notices  of  sale  of  stock  for  delinquent  assessments, 
of  change  of  name  and  of  dissolution  is  required,  and  except  where 
not  otherwise  provided  in  the  by-laws,  of  notices  of  stockholders’ 
meetings. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  doing 
business  in  the  State  must  file  a certified  copy  of  their  charter  or 
other  creative  instrument  or  act  with  the  Secretary  of  State;  and  also 
a copy  thereof  certified  by  the  Secretary  of  the  State  of  California 
with  the  County  Clerk  of  the  county  in  which  they  have  their 
principal  place  of  business  and  in  counties  where  their  property  is 
located.  § 408.  Filing  and  incidental  fees  same  as  for  domestic  cor- 
porations. § 409. 

Such  corporations  must  also,  within  40  days  from  commencing 
to  do  business  in  the  State,  file  with  the  Secretary  of  State  a designa- 
tion of  some  person  residing  in  the  State  on  whom  process  may  be 
served.  § 405;  Const.,  Art.  XII,  § 14;  L.  1905,  Ch.  471. 

Penalties  for  Non-Compliance.  Foreign  corporations  not  com- 
plying with  the  statutory  requirements  can  not  maintain  suit  in  the 
state  courts  (§  406),  and  are  subject  to  a fine  of  not  less  than  $500 
at  the  suit  of  the  State.  L.  1905,  Ch.  471,  § 410.  They  are  also  denied 
the  benefit  of  the  Statute  of  Limitations.  L.  1905,  Ch.  471. 

Taxation.  The  taxation  of  foreign  corporations  is  the  same  as 
for  domestic  corporations.  L.  1901,  Ch.  93. 

Books.  Foreign  corporations  doing  business  in  the  State  are 
subject  to  the  same  provisions  as  domestic  corporations  (§§  377-384; 
Const.,  Art.  XII,  §§  14,  15),  and  must  therefore  keep  the  same  books. 
Foreign  mining  companies  are  expressly  ordered  to  keep  the  same 
books.  § 588. 

Reports.  No  reports  are  required. 


CALIFORNIA. 


49 


Attachments  Against.  Same  as  against  non-resident  individuals. 
Code  Civ.  Pro.,  §§  541,  542. 

Liability  of  Stockholders.  Stockholders  of  foreign  corporations 
doing  business  in  the  State  are  subject  to  the  same  liabilities  as 
imposed  upon  stockholders  of  domestic  corporations.  § 322;  L.  1903, 
Ch.  215;  L.  1905,  Ch.  339;  Pinney  v.  Nelson,  183  U.  S.  144  (1901). 

15.  Combinations  and  Monopolies. 

Discrimination  in  rates  and  combinations  among  transportation 
companies  are  prohibited  by  the  Constitution.  Art.  XII,  §§  20,  21. 


COLORADO. 


1.  Corporation  Laws.* 

Constitution.  (1876.)  No  charter  of  incorporation  to  be  granted 
by  special  law,  except  for  such  municipal,  charitable,  educational  or 
reformatory  corporations  as  may  be  under  control  of  the  State.  Art. 
XV,  § 2.  Consolidations  in  any  manner  of  railroad  or  telegraph  com- 
panies owning  or  controlling  parallel  or  competing  lines  is  prohibited. 
Id.,  §§  4,  13.  No  stock  or  bonds  to  be  issued  except  for  labor  done, 
service  performed,  or  money  or  property  actually  received,  and  all  fic- 
titious increase  of  stock  or  indebtedness  declared  void.  Stock  not  to 
be  increased  except  in  pursuance  of  general  law,  nor  without  consent 
of  a majority  of  the  stock,  at  a meeting  held  after  at  least  thirty  days’ 
notice.  Id.,  § 9.  Foreign  corporations  to  have  one  or  more  known 
places  of  business  with  an  agent  on  whom  process  may  be  served. 
Id.,  § 10.  Regulations  for  mining  and  irrigation  companies  are  pre- 
scribed. Art.  XVI. 

Statutes.  The  Corporation  Law  of  Colorado  is  found  in  Mills’ 
Annotated  Statutes,  1891-1905,  Ch.  30,  of  which  Division  1 contains 
general  provisions  for  the  organization  of  corporations,  under  which 
corporations  may  be  formed  for  any  lawful  purpose  (§  472),  and 
Division  2 contains  additional  provisions  for  particular  corporations 
as  follows:  banks,  savings  banks,  trust,  deposit  and  security,  surety, 
title  guaranty,  toll  road,  ditch,  flume,  bridge  and  ferry,  mining,  tele- 
graph, telephone,  gas,  railroad,  charitable  and  joint  stock  companies. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  On  filing  certifi- 
cate of  incorporation,  if  authorized  capital  stock  does  not  exceed 
$50,000,  $20;  if  it  exceeds  $50,000,  20  cents  additional  on  each  $1,000  of 
such  excess.  § 491.  For  issuing  certificate  of  authority,  $5.  § 491k 

For  filing  and  recording  certificate  of  impression  of  corporate  seal, 
$2.50.  § 491  h. 

Fees  of  County  Recorder  for  filing  charter  vary  in  the  different 
counties  from  3 to  60  cents.  § 1900. 

The  annual  license  tax  must  also  be  paid  for  the  current  year. 

§ 3865. 

Franchise  Tax.  On  or  before  May  1st  of  each  year,  every  cor- 
poration having  a capital  stock  of  $25,000  or  over,  must  pay  to  the 

* References  are  to  Mills’  Annotated  Statutes,  1891-1905  (two  volumes,  1891,  and 
a supplement  to  January  i,  1905),  except  where  otherwise  noted. 


50 


COLORADO. 


51 


Secretary  of  State  (§  49ig)  a license  tax  of  2 cents  on  each  $1,000 
of  capital  stock.  § 3865.  No  franchise  tax  on  smaller  capitalizations. 

Local  Taxation.  Special  franchises  are  assessed  with  the  tangible 
property.  § 3862.  There  are  special  returns  prescribed  for  corpor- 
ations doing  business  and  owning  property  in  two  or  more  counties 
of  the  State  (See  § 13,  “Reports”),  (§  3864),  for  mining  corporations 
(§  3884),  building  and  loan  associations  (§  3876),  and  other  special 
corporations.  Property  owned  by  mining  corporations  is  deemed  to 
represent  the  value  of  their  capital  stock  for  purposes  of  taxation; 
except  that  non-producing  mines  are  taxed.  § 3890.  Private  ditches, 
canals  and  flumes  are  exempt.  Const.,  Art.  X,  § 3. 

General.  To  Secretary  of  State:  On  increase  of  capital  stock, 

20  cents  for  each  $1,000  of  increase.  § 491.  Amendments  of  charter, 
$5,  except  for  change  of  name,  when  the  fee  is  $25.  § 491a.  For 

filing  and  recording  certificate  of  paid  up  stock,  $2.50,  and  where 
such  stock  exceeds  $50,000,  five  cents  additional  on  each  $1,000  in 
excess.  § 491I1.  Filing  annual  report,  from  $1  to  $5.  § 491). 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 473;  Humphreys  v» 
Mooney,  5 Col.  282. 

Certificate  of  Incorporation.  As  many  copies  of  the  certificate 
of  incorporation  as  may  be  necessary  for  one  to  be  filed  in  each 
county  in  which  the  company  will  carry  on  business,  must  be  made, 
signed  and  acknowledged  by  the  incorporators.  This  certificate  must 
state  (§  473): 

(1)  Name  of  the  company,  which  must  commence  with 
the  word  “the”  and  end  with  the  word  “corporation,”  “corm 
pany,”  “association”  or  “society,”  and  must  indicate  the  busi- 
ness to  be  carried  on.  § 472.  Banks  and  corporations  not 
for  profit  are  excepted  from  this  requirement.  State  v.  Mc- 
Grath, 9 Am.  Corp.  Cases  519.  No  two  corporations  may 
bear  the  same  name  (§  475)  nor  any  so  similar  as  to  be  liable 
to  cause  mistakes.  § 625. 

(2)  Objects  for  which  the  company  is  created.  These 
can  not  be  changed  by  amendment  of  charter.  § 477.  They 
may  be  more  than  one. 

(3)  Amount  of  capital  stock  and  number  of  shares  of 
which  the  stock  shall  consist.  Capital  stock  not  limited. 
Par  value  of  shares  must  be  not  less  than  $1  nor  more  .than 
$100  each.  § 480. 

(4)  Term  of  existence,  not  to  exceed  twenty  years. 

(5)  Number  of  directors  or  trustees,  and  names  of  those 
who  shall  serve  for  the  first  year: 

(6)  Name  of  the  town  or  place,  and  the  county  in  which 
the  principal  office  of  the  company  shall  be  kept  (Tabor  v. 
Bank,  62  Fed.  383,  387  [1894]),  and  name  of  county  or  coun- 
ties in  which  principal  business  shall  be  carried  on. 


52 


CLASSIFIED  CORPORATION  LAWS. 


(7)  If  part  of  its  business  is  to  be  carried  on  outside  of 
the  State,  the  certificate  must  state  that  fact,  and  also  the 
name  of  the  town  and  county  in  the  State  in  which  the  prin- 
cipal office  will  be  kept,  and  the  name  of  the  county  in  which 
its  principal  business  will  be  carried  on  in  the  State. 

(8)  Power  to  make  by-laws  may  be  given  the  direc- 
tors. § 484. 

(9)  Directors’  meetings  may  be  held  outside  the  State,  if 
so  provided  in  the  certificate.  §§  481,  493. 

Filing  and  Recording.  Certificate  of  incorporation  must  be  filed 
in  the  office  of  the  Secretary  of  State,  and  either  duplicates  or  certified 
copies  from  Secretary  of  State  are  filed  with  recorders  of  deeds  in 
every  county  in  which  the  company  is  to  carry  on  business.  §§  473- 
475;  People  v.  Cheeseman,  7 Col.  376;  3 Pac.  716. 


4.  Organization. 

First  Meetings.  Stockholders’  first  meeting  must  be  held  within 
the  State.  It  may  be  held  on  waiver  and  consent  as  to  time  and 
place  (Byers  v.  Hussey,  4 Col.  515,  522;  Humphreys  v.  Mooney,  5 Col. 
282),  and  votes  may  be  cast  by  proxy.  If  directors  are  authorized 
to  make  by-laws,  this  first  meeting  loses  much  of  its  importance. 

The  first  meeting  of  directors  for  election  of  officers  and  other 
details  of  organization,  should  be  held  immediately  upon  issuance  of 
certificate  by  Secretary  of  State.  A president  is  required  by  the 
statute  (§  483);  the  other  officers  are  to  be  prescribed  by  the  by-laws. 

By-Laws.  If  the  power  to  make  by-laws  has  not  been  delegated 
to  the  directors  by  the  certificate  of  incorporation,  by-laws  should  be 
adopted  at  the  first  meeting  of  the  incorporators.  § 484.  They  should 
provide  for  the  usual  details  of  corporate  procedure. 

Certificates.  None  are  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  certificate  of  incorporation  with 
Secretary  of  State,  payment  of  fees  and  issuance  of  certificate  by 
Secretary  of  State.  §§  491,  49ij.  Is  not  to  exceed  twenty  years,  but 
directors  continue  as  trustees  after  dissolution  or  expiration,  until 
the  corporate  affairs  are  settled.  §§  473,  619,  620.  Can  not  be  inquired 
into  collaterally.  Humphreys  v.  Mooney,  5 Col.  282;  Ry.  Co.  v.  Ry. 
Co.,  2 Col.  673. 

Beginning  Business.  May  be  commenced  forthwith.  Jones  v. 
Aspen  H.  Co.,  21  Col.  263. 

Renewal.  May  be  effected  for  another  period  of  twenty  years, 
by  majority  vote  of  entire  outstanding  stock,  cast  at  a special  meet- 
ing called  for  the  purpose  by  the  holders  of  at  least  10  per  cent,  of 
the  entire  capital  stock  on  publication  for  four  weeks  and  thirty  days’ 
notice  by  mail,  vote  to  be  certified  by  president  and  secretary  and  filed 
in  the  same  offices  as  original  certificate.  Fees,  same  as  for  original 


COLORADO. 


53 


incorporation.  If  charter  has  expired,  call  for  meeting  and  vote  re- 
quire two-thirds  of  outstanding  stock.  L.  1905,  Ch.  87. 

Forfeiture  of  Charter.  Occurs  on  failure  to  pay  license  tax. 
§§  3867-3869.  Quo  warranto  lies  for  failure  to  pay  fees  on  issuance 
of  stock.  § 491b;  Const.,  Art.  XV,  § 3;  Road  Co.  v.  People,  5 Col.  39; 
Jones  v.  Aspen  H.  Co.,  21  Col.  263. 

Dissolution.  May  be  had  voluntarily  by  a vote  of  two-thirds 
of  the  entire  stock  at  a meeting  called  for  that  purpose,  on  same 
notice  as  prescribed  for  amendments,  but  only  when  all  debts  have 
been  paid,  and  with  due  notice,  filing  and  publication.  §§  491m,  497, 
619  a,  620;  Jones  v.  Bank,  10  Col.  464;  17  Pac.  272. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated  in  § 476,  with  the 
additional  power  to  change  the  corporate  seal  at  any  time  by  filing 
an  impression  thereof  with  the  Secretary  of  State. 

To  Hold  Property.  This  power  is  limited  in  the  numeration  to 
such  as  is  “necessary  for  the  transaction  of  their  business.”  § 476. 

Its  Own  Stock.  Is  prohibited,  except  as  to  such  as 
may  be  forfeited  for  non-payment  of  assessments  thereon.  § 485; 
Talmon  v.  Mica  Co.,  22  N.  W.  506. 

Stock  of  Other  Corporations.  Is  not  prohibited  by  the 
statute,  but  there  is  a decision  holding  such  a transaction  invalid 
against  objection  of  the  minority  stockholders,  when  it  amounted  to 
obtaining  control  of  the  other  corporation  and  obtaining  its  property. 
Ditch  companies  may  hold  stock  of  telephone  companies  to  facilitate 
their  business  only.  § 477;  Glengary  C.  M.  Co.  v.  Boehmer,  28  Col.  1; 
62  Pac.  839  (1900). 

To  Borrow  Money.  This  power  is  not  limited  as  to  general  cor- 
porations, except  by  the  amount  of  the  capital  stock.  § 625.  All 
fictitious  increase  of  indebtedness  declared  void.  § 618;  Const.,  Art. 
XV,  § 9;  Mining  Co.  v.  Bank,  2 Col.  248. 

The  directors  of  mining  and  manufacturing  companies  can  not 
encumber  their  mines,  plants  or  machinery  without  a majority  vote 
of  their  stockholders.  § 481;  Bartlett  v.  Gates,  118  Fed.  66,  67  (1902). 

To  Do  Business  in  Other  States.  Is  permitted  only  when  speci- 
fied and  allowed  by  the  certificate  of  incorporation.  § 473,  subdiv.  9. 

Consolidation  or  Merger.  Is  permitted  of  corporations  of  the 
same  kind  and  in  the  same  vicinity  by  affirmative  vote  of  three- 
fourths  of  the  stock  of  each  company,  cast  at  an  annual  meeting,  or 
at  a special  meeting  called  for  that  purpose  by  the  directors,  or  by 
a majority  of  the  stock  on  notice  as  prescribed  for  amendments.  § 628. 
Certificates  of  incorporation  are  then  prepared,  setting  forth  the  facts 
of  the  consolidation,  and  signed  and  acknowledged  by  at  least  three 
of  the  stockholders  of  each  consolidated  company,  and  are  filed  in 
the  same  offices  as  were  the  original  certificates  of  incorporation. 
Publication  of  four  weeks  before  meeting  and  three  weeks  after 
effected  consolidation,  is  required.  § 628;  Cook  v.  Hager,  3 Col.  388; 
Utley  v.  L.  M.  Co.,  4 Col.  371. 


54 


CLASSIFIED  CORPORATION  LAWS. 


By  purchase,  under  foreclosure  or  execution,  of  all  the  property, 
rights  and  franchises  of  another  corporation,  the  purchasing  corpora- 
tion acquires  all  the  rights  and  powers  and  becomes  subject  to  all  the 
duties  and  liabilities  of  such  other  corporation,  and  holders  of  mort- 
gage or  deed  of  trust  may  take  steps  to  procure  extension  of  its  cor- 
porate existence.  L.  1903,  Ch.  78. 

Amendment  of  Charter.  May  be  had  in  any  respect,  except 
change  of  object  (§  477),  by  a two-thirds  vote  of  all  the  stock  sub- 
scribed, at  a regular  meeting,  provided  the  notice  specifies  the  amend- 
ment to  be  voted  on,  or  at  a special  meeting  on  thirty  or  sixty  days’ 
similar  notice,  served  personally  or  by  mail.  Such  meeting  may  be 
called  on  the  written  request  of  one-third  of  the  outstanding  stock, 
stating  the  substance  of  the  proposed  amendment.  When  amend- 
ments have  been  duly  adopted,  a certificate  setting  forth  the  facts  is 
certified  by  the  president  and  attested  by  the  secretary  with  the  cor- 
porate seal,  and  filed  as  was  original  certificate.  §§  477~479a,  625-629. 

7.  Capital  Stock. 

Amount.  Not  limited. 

Initial  Payment.  Not  prescribed. 

Consideration  for  Issue.  May  be  labor  done,  services  performed 
or  money  or  property  actually  received.  All  fictitious  issue  of  stock 
is  void  (§  618;  Const.,  Art.  XV,  § 9),  but  by  § 490,  the  directors  are 
authorized  to  issue  stock  for  mines,  manufactories  or  other  property 
necessary  for  their  business,  and  stock  so  issued  is  to  be  declared  and 
taken  to  be  full  paid  stock,  it  must,  however,  be  reported  according 
to  the  facts  in  all  statements  or  reports  of  the  company.  (See  § 13, 
'‘Reports.”)  Arkansas,  etc.,  Co.  v.  Co.,  13  Col.  587;  22  Pac.  954; 
Arapahoe,  etc.  Co.  v.  Stevens,  13  Col.  541;  22  Pac.  823;  DuPont  v. 
Tilden,  42  Fed.  87. 

Subscriptions  are  payable  in  such  instalments  and  at  such  times 
as  the  directors  shall  determine  (§  480),  but  they  must  be  levied  pro 
rata.  § 489.  Suit  for  payment  of  any  subscription  instalment  may 
be  commenced  twenty  days  after  personal  demand  therefor,  or  thirty 
days  after  written  demand.  Also  the  directors  may  by  by-laws  pre- 
scribe forfeiture  or  sale  of  stock  for  non-payment. 

Mining  and  irrigation  companies,  under  certain  conditions  and 
with  certain  preliminaries,  may  assess  full  paid  stock.  §§  569,  583b. 

Increase  or  Decrease.  Ts  accomplished  in  the  same  manner  as 
other  amendments  of  the  certificate  of  incorporation,  except  that 
thirty  days’  notice  of  the  meeting  must  be  given,  stating  the  amount 
of  the  proposed  increase  or  decrease,  which  latter  must  never  be  had 
to  the  prejudice -of  creditors.  §§  477,  479,  625;  Const.,  Art.  XV,  § 9. 
Fees  on  increase  are  twenty  cents  for  each  $1,000  of  increase.  § 491. 

Classes  of  Stock.  Not  mentioned  by  the  statute. 

Par  Value  of  Shares.  Must  be  not  less  than  $1  nor  more  than 
$100.  § 480. 

Stock  Certificates.  Signing  officers  and  other  details  to  be  pro- 
vided for  by  by-laws.  § 480. 


COLORADO. 


55 


Transfer  of  Stock.  Manner  of  transfer  may  be  prescribed  by 
by-laws.  § 480.  No  transfer  or  pledge  of  stock  shall  be  valid  for 
any  purpose,  except  to  make  the  transferee  liable  as  a stockholder, 
unless  entered  on  the  stock  book  within  60  days  from  the  date  of  such 
transfer.  Penalty  for  refusal  of  corporation  officials  to  make  entry 
is  $50  and  all  damages,  to  be  paid  by  the  corporation  to  the  party 
injured. 


8.  Stockholders. 

Rights  and  Powers.  The  stockholders  control,  by  various  pre- 
scribed proportions  of  votes,  all  amendments  of  certificate  of  incor- 
poration; also  dissolution,  renewal  of  period  of  existence,  etc.  Where 
assessments  are  allowed  on  full  paid  stock  in  certain  classes  of  cor- 
porations, they  control  such  assessments.  They  are  entitled  to  stock 
certificates  issued  as  the  by-laws  may  prescribe,  and  all  books,  ac- 
counts and  papers  of  the  corporation  are  open  to  their  inspection. 
§§  488,  508. 

Liability.  Each  stockholder  is  liable  for  the  corporate  debts  to 
the  extent  of  any  amount  that  may  be  unpaid  on  his  stock.  § 486; 
Buenz  v.  Cook,  15  Col.  38;  24  Pac.  679;  Colo.  F.  & I.  Co.  v.  Co.,  13 
Col.  App.  474;  59  Pac.  222  (1899).  A joint  action  may  be  maintained 
against  the  corporation  and  the  stockholders.  Smith  v.  Fire  Ins.  Co., 
14  Fed.  399  (Colo.);  Fire  Ins.  Co.  v.  Tabor,  16  Col.  531. 

Meetings.  Must  be  held  within  the  State,  at  the  office  of  the 
company.  §§  481,  493. 

Notice.  Except  meetings  for  special  purposes,  as  for  amendment 
of  charter,  etc.,  where  special  notice  is  provided,  all  stockholders’ 
meetings  must  be  notified  by  ten  days’  publication  in  a newspaper 
nearest  to  the  principal  office  and  also  where  addresses  are  furnished 
the  secretary,  by  notice  served  personally  or  by  mail  thirty  days 
before  the  meeting.  §§  481,  626. 

Quorum.  A majority  of  the  outstanding  stock  is  required.  § 481. 

Voting.  At  all  elections  of  directors  voting  must  be  by  ballot, 
and  cumulative  voting  and  voting  by  proxy  are  permitted.  § 481; 
People  v.  Lothrop,  3 Col.  452. 

9.  Directors. 

Number.  The  corporate  powers  shall  be  exercised  by  a board 
of  directors  or  trustees  of  not  less  than  three  nor  more  than  thirteen. 
§ 481.  The  number  may  be  changed  by  amendment  of  the  certificate 
of  incorporation.  (See  under  § 6,  “Amendment  of  Charter.”)  Mining 
companies  and  banks  must  not  have  more  than  nine  directors.  § 585. 

Qualifications.  The  directors  must  be  stockholders  (§  481;  Byers 
v.  Rollins,  13  Col.  26;  21  Pac.  894),  but  need  not  be  residents.  Hum- 
phreys v.  Mooney,  5 Col.  292.  They  are  elected  annually.  They  are 
not  entitled  to  compensation  as  directors,  unless  provided  for  or  ex- 
pressly sanctioned  in  the  charter.  Brown  v.  R.  M.  S.  Mines,  17  Col. 
421;  30  Pac.  66. 

Powers.  The  powers  of  directors  in  this  State  are  very  broad. 
A.  R.,  etc.  Co.  v.  Co.,  13  Col.  598;  22  Pac.  958;  Miller  v.  Murray,  17 


56 


CLASSIFIED  CORPORATION  LAWS. 


Col.  408;  30  Pac.  46.  The  power  to  make  and  control  by-laws  may 
be  delegated  to  the  directors  by  the  certificate  of  incorporation.  § 484. 
The  last  directors  on  dissolution  or  expiration  continue  as  trustees 
to  settle  the  corporate  affairs.  §§  619,  620. 

Liability.  For  failure  to  make  annual  report,  the  directors  and 
officers  render  themselves  jointly  and  severally  liable  for  all  cor- 
porate debts  created  during  the  preceding  year  and  until  the  report 
is  made  and  filed.  § 491  j . So,  also,  for  declaring  and  paying  any 
dividend  which  would  render  the  company  insolvent  or  diminish  its 
capital  stock.  § 492.  Failure  to  properly  keep  and,  on  demand,  per- 
mit inspection  of  books,  is  a misdemeanor,  and  the  offender  is  liable  in 
fines  and  damages.  §§  488,  508;  Nix  v.  Miller,  26  Col.  203;  57  Pac. 
1084;  Matthew  v.  Patterson,  16  Col.  215;  26  Pac.  812;  Buenz  v.  Cook, 
15  Col.  38;  24  Pac.  679;  Cook  v.  Merritt,  15  Col.  212;  25  Pac.  176. 

Meetings.  Of  directors  may  be  held  without  the  State  if  so  pro- 
vided in  the  certificate  of  incorporation  (§§  481,  493)  or  if  such  meet- 
ing outside  the  State  be  authorized  or  ratified  by  a majority  of  the’ 
stockholders  at  a regular  meeting.  § 493;  Humphreys  v.  Mooney, 
5 Col.  293.  Notice  of  directors’  meetings  is  to  be  prescribed  by  by- 
laws, but  when  all  are  present  or  sign  consent  on  the  record,  notice 
may  be  waived  and  action  taken  at  such  meeting  is  valid.  § 493. 
Quorum  is  a majority,  but  may  be  prescribed  by  by-laws.  People  v. 
Lothrop,  3 Col.  452. 

Executive  Committee.  No  statutory  provision,  but  may  undoubt- 
edly be  provided  for  in  the  by-laws. 

10.  Officers. 

A president  is  prescribed  by  law,  who  must  be  a director  (§  483); 
other  officers  may  be  specified  by  the  by-laws.  Security  may  be  de- 
manded of  such  officers.  § 483. 

Liability.  They  are  liable,  in  fine  and  damages,  for  neglecting  to 
make  proper  entries,  and  for  refusal  to  allow  inspection  of  books  and 
papers  (§§  488,  494,  508),  and  such  acts  are  declared  misdemeanors. 
They  are  also  jointly  and  severally  liable  with  the  directors  for  the 
corporate  debts,  on  failure  to  make  annual  reports.  § 49ij.  (See 
§ 9,  “Directors.”) 

11.  Principal  Office. 

One  must  be  maintained  in  the  State.  § 473.  Its  location  must 
be  given  in  the  certificate  of  incorporation,  and  is  changed  with  the 
same  formalities  as  for  other  amendments.  § 625;  Tabor  v.  Bank, 

62  Fed.  383,  387  (1894)- 

12.  Corporate  Books. 

The  statutes  provide  for  books  of  account  (§  488)  and  for  a 
specific  stock  book  (§  508),  showing  alphabetically  names  of  all  who 
are  and  have  been  stockholders  during  the  preceding  year,  their 


Colorado. 


5? 

places  of  residence,  number  of  shares  held  by  each,  time  when  they 
became  and  ceased  to  be  stockholders,  amount  of  stock  actually  paid 
in,  and  what  proportion  has  been  paid  in  cash.  These  books  must 
be  kept  at  the  principal  office  or  place  of  business  in  the  State.  §§  488, 
508.  Railroad  and  telegraph  companies  and  industrial  corporations 
with  paid  up  capital  exceeding  $20,000,000,  having  a transfer  agency 
in  the  City  of  New  York,  are  exempt  from  the  provisions  of  § 508. 

Examination  of.  The  books  named  above  must  be  kept  open  for 
the  inspection  of  stockholders  at  all  reasonable  times  (§  488),  and 
the  stock  register  must  be  open  to  creditors  during  usual  business 
hours;  they  also  may  make  extracts  from  the  same.  Penalties  of 
fines  and  damages  are  incurred  by  refusal.  §§  488,  508. 

13.  Reports. 

Every  corporation  must,  within  sixty  days  after  January  1st  of 
each  year,  make  and  file  an  annual  report  in  the  office  of  the  Secre- 
tary of  State,  showing:  (1)  Names  of  its  officers  and  their  several 

places  of  residence,  together  with  the  street  or  business  addresses  of 
such  officers.  (2)  Names  of  its  directors  or  trustees,  and  their  several 
places  of  residence,  together  with  the  street  or  business  addresses  of 
such  directors  or  trustees.  (3)  Amount  of  its  capital  stock  as  fixed 
and  determined  by  its  articles  of  incorporation  and  amendments  there- 
to. (4)  Proportion  of  capital  stock  actually  paid  in.  (5)  Whether 
same  was  paid  in  cash,  by  the  purchase  of  property,  or  otherwise. 
(6)  Amount  of  the  indebtedness  of  said  corporation  at  the  date  of 
filing  said  report.  (7)  Setting  forth  whether  or  not  it  is  engaged  in 
active  operation  of  its  business  within  the  State  of  Colorado.  (8) 
Such  other  information  as  will  show  with  reasonable  fullness  and 
certainty  the  condition  of  its  real  and  personal  property  and  the 
financial  condition  of  such  corporation  at  the  date  of  filing  said 
report.  Mining  corporations  must  make  additional  statements.  § 49 1 j . 

Corporations  doing  business  or  owning  property  in  two  or  more 
counties,  must  on  or  before  June  1st  of  each  year,  on  penalty  of  $100 
and  $100  additional  for  every  day  of  delay  after  that  day,  make  a re- 
port to  the  State  Auditor  as  follows:  (1)  Name  and  location  of  prin- 

cipal office.  (2)  Amount  of  capital  stock  as  authorized,  and  the  num- 
ber of  shares  into  which  the  same  is  divided.  (3)  Amount  of  capital 
stock  paid  in,  and  amount  of  bonds  outstanding,  if  any.  (4)  Average 
market  value  of  stock  and  bonds  during  the  twelve  months  next  pre- 
ceding date  of  report,  or,  if  they  have  none,  the  actual  value  thereof. 
(5)  Total  indebtedness  of  the  corporation  except  indebtedness  for 
current  expenses,  excluding  from  such  expenses  amount  paid  for 
purchase  or  improvement  of  property.  (6)  Value  and  location  of  all 
its  property.  (7)  Gross  earnings  for  twelve  months  ending  March 
31st.  (8)  Net  earnings  during  the  same  period.  (9)  Difference  in 

value  between  all  tangible  property  and  the  capital  stock,  and  the 
mortgage  or  bonded  indebtedness.  (10)  Name  and  particular  de- 
scription of  each  franchise  or  privilege  owned  or  enjoyed  and  the 
value  thereof. 

After  the  payment  of  the  last  instalment  of  capital  stock,  the 
president  and  a majority  of  the  directors  must  make  and  verify  a 
certificate  stating  the  amount  of  the  capital  stock  and  that  it  has 
been  fully  paid,  which  certificate  is  recorded  in  the  office  of  the 
Secretary  of  State  and  with  the  recorders  of  each  county  where  the 


58 


CLASSIFIED  CORPORATION  LAWS. 


company  is  doing  business.  § 487.  Penalty  for  non-compliance  with 
this  section  is  liability  for  corporate  debts.  § 491. 

Tax  returns  are  required  to  be  made  between  April  1st  and  May 
15th  of  each  year  on  blanks  furnished  by  the  county  assessors,  and 
the  latter  may  examine  officers  under  oath  on  such  returns.  § 3864. 

Publication  is  required  merely  of  notices  of  amendments,  etc. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation 
must,  before  it  will  be  permitted  to  do  any  business  in  the  State,  make 
and  file  a certificate,  acknowledged  by  its  president  and  secretary,  with 
the  Secretary  of  State  and  with  the  Recorder  of  Deeds  of  the  county 
in  which  business  is  carried  on,  designating  the  principal  place  where 
the  business  of  the  company  is  carried  on  in  the  State,  and  an  au- 
thorized agent,  residing  at  the  same  place,  on  whom  process  may  be 
served.  § 499.  A duly  authenticated  copy  of  its  charter  or  certifi- 
cate of  incorporation  and,  if  the  latter,  also  of  the  general  law  under 
which  it  was  incorporated,  must  also  be  filed  with  the  Secretary  of 
State  (§  500),  who  thereupon  issues  certificate  of  authority.  § 49ii. 

Fees  are:  To  Secretary  of  State,  $30  on  authorized  capital  stock 

of  $50,000  or  less;  30  cents  on  each  additional  $1,000  or  fraction.  Same 
fees  for  any  subsequent  increase.  § 491  c.  For  filing  copy  of  foreign 
law,  $5  (§  491c);  for  certificate  of . authority,  $5  (§  49F);  for  filing 
designation  of  agent,  $5.  § 49ij.  Annual  license  tax  must  also  be 

paid  for  the  current  year  to  May  1st  next  succeeding.  § 3866.  On 
every  subsequent  amendment,  ' fees  are  the  same  as  prescribed  for 
domestic  corporations.  § 49ig. 

Penalties  for  Non-Compliance.  Failure  to  comply  renders  every 
officer,  agent  and  stockholder  of  the  company  jointly  and  severally 
liable  on  any  and  all  contracts  of  such  company  made  within  the 
State  during  the  period  of  such  default.  § 501.  Failure  to  pay  incor- 
poration fees  deprives  corporation  of  right  to  transact  any  businessi 
hold  any  property  or  sue  or  defend  suits  in  the  State.  § 491c,  So 
also  on  failure  to  pay  annual  license  tax.  § 3867.  And  quo  war- 
ranto lies  on  failure  to  pay  fee  and  file  certificate  on  increase  of  capital 
stock.  § 49 id. 

Taxation.  Annual  license  tax,  payable  on  or  before  May  1st  of 
each  year,  is  4 cents  on  each  $1,000  of  its  capital  stock,  but  if  the 
par  value  of  its  shares  is  less  than  $1,  then  cents  per  1,000  shares. 
§ 3866. 

Books.  Are  the  same  as  prescribed  for  domestic  corporations. 

Reports.  Foreign  corporations  are  subjected  to  all  the  regula- 
tions concerning  domestic  corporations  and  must  file  the  same  re- 
ports. §§  49ij,  3864. 

Attachments  Against.  Fie  against  foreign  corporations  as  such. 
§ 2700. 

General.  Foreign  corporations  are  not  allowed  a longer  period 
of  existence  in  the  State  than  domestic  corporations.  Within  the 


COLORADO. 


59 


Same  limitations,  such  period  may  be  renewed,  but  in  no  case  beyond 
the  period  of  such  corporation’s  existence  in  the  State  of  its  organi- 
zation. § 491  o;  Iron  Co.  v.  Cowie,  31  Col.  450  (1903). 

There  is  a tendency  to  discriminate  against  foreign  corporations 
in  this  State,  by  taxing  the  entire  capital  stock  (§  3866),  by  restrict- 
ing their  power  to  mortgage  their  property  (§  499),  by  compelling 
them  to  go  through  all  proceedings  subsequent  to  organization  or 
authorization  in  Colorado  as  well  as  in  the  home  State.  §§  491  d, 
49ig,  499a.  It  is  to  be  noted,  too,  that  restrictions  on  use  of  similar 
names  are  only  in  favor  of  domestic  corporations.  § 625;  Iron  Co. 
v.  Cowie.  31  Col.  450;  Utley  v.  Clark  Co.,  4 Col.  369;  Brittle  Silver  Co. 
v.  Rust,  51  Pac.  526. 

15.  Combinations  and  Monopolies. 

No  provisions. 


CONNECTICUT. 


1.  Corporation  Laws.* 

Constitution.  No  provisions  as  to  business  corporations. 

Statutes.  General  corporations  are  formed  under  the  Laws  of 
1903,  Chapter  194  (amended  by  L.  1905,  Chs.  1 66,  171,  267),  for  any 
lawful  business  not  otherwise  provided  for,  and  which  does  not  in- 
volve the  exercise  of  the  power  of  eminent  domain.  § 62.  This 
restriction  does  nQt  apply  to  a company  organized  to  operate  outside 
the  State,  provided  such  corporation  is  not  in  violation  of  the  laws  of 
the  state  in  which  it  is  proposed  to  operate.  §§  4,  62. 

Bank  and  trust  companies,  insurance,  surety,  railroad,  street  rail- 
way, telegraph,  telephone,  gas  and  electric,  building  and  loan,  water 
and  other  corporations  have  special  provisions.  General  Statutes, 
1902,  §§  3399-4024. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer,  before  certificate  of 
incorporation  can  be  approved  by  the  Secretary  of  State:  50  cents  on 
every  $1,000  of  authorized  capital  up  to  $5,000,000  and  10  cents  on 
every  $1,000  in  excess  thereof;  minimum  payment,  $25.  § 61. 

To  Secretary  of  State:  For  filing  certificate  of  incorporation,  $1; 
for  recording  same,  $1  for  two  pages  or  less,  and  50  cents  for  each 
additional  page,  and  same  fees  for  filing  and  recording  certificate  of 
organization.  For  preparing  forms  for  certificates  and  returns,  etc., 
for  recording  and  for  copies,  50  cents  for  each  page,  but  in  no  case 
less  than  $1;  for  certificate  and  state  seal,  50  cents.  R.  S.  1902,  § 4811. 
Recording  fees  to  Town  Clerks  and  for  copies,  at  the  rate  of  40  cents 
per  page.  Id.,  § 4845. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Same  as  for  individuals.  R.  S.  1902,  § 2328. 
Stock  is  not  taxable,  when  property  it  represents  is  taxed.  Id.,  § 2329. 

General.  To  State  Treasurer  on  increase  of  capital  stock,  50 
cents  on  each  $1,000  of  increase  until  the  total  capital  stock  is 
$5,000,000;  10  cents  per  $1,000  on  excess;  minimum  payment,  $25.  § 61. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 62.  No  requirements 

* References  are  to  Chapter  194  of  L.  1903,  unless  otherwise  stated. 


60 


CONNECTICUT. 


61 


as  to  residence.  They  have  charge  of  the  affairs  of  the  corporation 
until  directors  are  elected  and  may  take  steps  to  obtain  subscriptions 
to  the  stock.  §66. 

Certificate  of  Incorporation.  Must  be  signed  and  sworn  to  by 
the  incorporators  (§  60),  and  must  set  forth  (§  63): 

(1)  Name  of  the  corporation.  This  must  not  resemble  that 
of  an  existing  corporation  so  closely  as  to  lead  to  confusion. 
Must  begin  with  “ The  ” and  end  with  “ Company  ” or  “ Cor- 
poration ” or  have  the  word  “ Incorporated  ” immediately 
after  or  under  it.  § 2. 

(2)  Name  of  the  town  in  the  State  in  which  the  corpora- 
tion is  to  be  located. 

(3)  Nature  of  the  business  to  be  transacted  or  the  purposes 
to  be  promoted  or  carried  out. 

(4)  Amount  of  capital  stock,  not  less  than  $2,000;  the  num- 
ber of  shares  into  which  it  is  divided  and  the  par  value  of 
each,  which  must  not  be  less  than  $25.  If  there  be  more 
than  one  class  of  stock,  a description  of  the  different  classes, 
with  the  terms  on  which  they  are  respectively  created. 

(5)  Amount  of  capital  stock  with  which  the  corporation 
shall  commence  business;  not  less  than  $1,000. 

(6)  Period,  if  any,  limited  for  the  duration  of  the  corpora- 
tion. 

The  certificate  may  also  contain  any  lawful  provisions  for  regu- 
lating the  business  or  defining  the  powers  of  the  corporation,  its 
officers,  directors,  stockholders  or  any  class  of  stockholders.  § 64. 

Filing  and  Recording.  The  certificate  is  filed  with  the  Secretary 
of  State  who,  if  it  conforms  to  the  law,  and  if  all  taxes  have  been 
paid,  approves  and  records  it.  A copy  certified  by  the  Secretary  of 
State  must  be  filed  and  recorded  in  the  office  of  the  Town  Clerk  of 
the  town  where  the  corporation  is  to  be  located.  § 60.  A certificate 
of  organization  (See  “Certificates”  under  § 4)  is  similarly  filed,  ap- 
proved and  recorded.  § 69. 

4.  Organization. 

First  Meetings.  The  first  meeting  of  stockholders  may  be  called 
by  a majority  of  the  incorporators  by  notice  published  twice  at  least 
seven  days  before  the  time  set,  in  a newspaper  of  the  State  circulating 
in  the  town  where  the  corporation  is  located.  Notice  may  be  waived 
by  written  waiver  and  consent  of  all  the  subscribers  to  the  stock  and 
a majority  of  the  incorporators,  entered  on  the  records.  § 67.  The 
subscribers  may  attend  and  vote  by  attorney.  §§  25,  68.  The  meet- 
ing must  be  held  within  the  State.  § 22.  At  this  meeting  a temporary 
clerk  is  chosen,  and  three  or  more  directors,  who  must  be  stock- 
holders, are  elected  by  ballot.  By-laws  should  also  be  adopted.  Id. 

The  first  meeting  of  directors  for  election  of  officers  immediately 
follows  the  incorporators’  meeting.  §§  69,  70.  At  this  meeting  are 
elected  a president,  a treasurer,  a secretary  and  such  other  officers  as 
the  by-laws  prescribe.  (See  § 10,  “ Officers.”) 

By-Laws.  Are  adopted  at  the  first  meeting  of  the  subscribers 


62 


CLASSIFIED  CORPORATION  LAWS. 


to  the  stock.  § 68.  Subject  to  the  by-laws  adopted  by  the  stock- 
holders, the  directors  may  make  and  alter  by-laws.  § io.  By-laws 
can  not  be  amended  or  repealed  without  special  notice.  § 22. 

Certificates.  On  completion  of  organization  a majority  of  the 
directors  file  a “certificate  of  organization,”  setting  forth:  (1)  Amount 
of  each  class  of  stock  subscribed  for.  (2)  Amount  paid  thereon  in 
cash.  (3)  Amount  paid  thereon  in  property  other  than  cash.  (4) 
Amount  paid  on  each  share  of  stock  which  is  not  paid  for  in  full. 
(5)  The  name,  residence  and  address  of  each  of  the  original  sub- 
scribers, with  the  number  and  class  of  shares  of  each.  (6)  That  the 
directors  and  officers  of  the  corporation  have  been  duly  elected  and 
its  by-laws  adopted.  (7)  The  name,  residence  and  postoffice  address 
of  each  of  the  officers  and  directors.  (8)  The  exact  location  of  its 
principal  office  in  the  State  and  name  of  the  agent  in  charge  to  re- 
ceive service  of  process.  § 69;  L.  1905,  Ch.  267. 

5.  Corporate  Existence. 

When  Commenced.  On  approval  by  Secretary  of  State  of  certifi- 
cate of  incorporation.  § 65.  The  statute  permits  perpetual  existence. 
§ 63.  Existence  continues  after  expiration  by  limitation  or  otherwise 
for  the  purpose  of  closing  up  affairs.  § 36.  A copy  of  certificate  of 
organization  approved  and  certified  by  the  Secretary  of  State,  under 
the  seal  of  the  State,  is  prima  facie  evidence  of  due  organization  and 
authority  to  do  business.  § 69. 

Beginning  Business.  Business  can  not  be  commenced  until  the 
amount  of  capital  specified  in  the  certificate  of  incorporation  as  the 
amount  with  which  it  will  begin  business  has  been  paid  in;  nor  un- 
til its  directors  and  officers  have  been  duly  elected  and  its  by-laws 
adopted;  nor  until  the  certificate  of  organization  stating  these  facts 
has  been  filed.  § 69.  Unless  this  certificate  is  filed  within  two  years 
after  filing  the  certificate  of  incorporation,  the  latter  is  void.  L.  1905, 
Ch.  267. 

Renewal.  Is  not  specially  provided  for,  the  statute  contemplat- 
ing perpetual  existence.  § 63.  If  limited  in  the  charter  renewal  may 
be  effected  by  regular  amendment. 

Forfeiture  of  Charter.  Where  corporation  has  been  wilfully 
guilty  of  ultra  vires  acts  or  is  grossly  mismanaged,  its  charter  may  be 
forfeited  at  suit  of  one-tenth  of  the  stock  (§  26)  or  by  quo  warranto 
at  suit  of  Attorney  General.  R.  S.  1902,  § 1026. 

Dissolution.  On  the  ground  of  ultra  vires  acts  or  gross  misman- 
agement or  fraud,  may  be  had  on  application  by  minority  stock- 
holders holding  one-tenth  of  the  stock,  to  the  Superior  Court  of  the 
county  of  its  location.  §§  26-28.  Voluntary  dissolution  may  be  had 
on  consent  signed  and  acknowledged  by  all  the  stockholders;  or  on 
a three-fourths  vote  of  each  class  of  stock,  confirming  a majority  vote 
of  the  directors.  Stockholders’  meeting  to  be  called  for  the  purpose 
on  notice  containing  a copy  of  the  directors’  vote,  given  not  less  than 
thirty  nor  more  than  forty  days  before  the  meeting  and  published 
once  a week  for  four  weeks  next  preceding  the  meeting  in  a news- 
paper of  the  State  having  circulation  in  the  town  where  the  corpora- 
tion is  located.  § 29.  Proceedings  on  dissolution,  with  directors  as 


CONNECTICUT. 


63 


trustees,  etc.,  are  given.  §§  30-34.  A certificate  completing  same  is 
to  be  filed  with,  approved  and  recorded  by  the  Secretary  of  State. 
§ 34- 

6.  Corporate  Powers. 

General.  General  powers  are  enumerated.  § 3.  The  power  to 
share  profits  with  employees  is  conferred.  § 9. 

To  Hold  Property.  This  power  is  limited  to  such  property  as 
the  purposes  of  the  corporation  require,  or  as  may  be  taken  in  pay- 
ment of  debts  or  for  security.  § 3. 

Its  Own  Stock.  This  power  is  expressly  given  if  not 
prejudicial  to  creditors,  with  consent  of  three-fourths  of  outstanding 
stock  at  a meeting  called  for  that  purpose.  Shares  so  acquired  are 
held  as  treasury  stock  and  are  not  voted.  § 11.  Certificate  of  any 
such  transaction  must  be  made  by  the  president  and  treasurer  and 
recorded  with  the  Secretary  of  State  within  six  months.  Id. 

Stock  of  Other  Corporations.  This  power  is  expressly 
given.  § 11.  One  director  or  executive  officer  of  the  holding  cor- 
poration may  be  elected  director  of  the  other  corporation  though  he 
is  not  individually  a stockholder  thereof.  § 10. 

To  Borrow  Money.  No  restrictions.  § 59. 

To  Do  Business  in  Other  States.  This  power  is  granted,  even  to 
the  extent  of  business  which  is  not  permitted  under  general  charters 
within  the  State,  if  not  prohibited  by  the  laws  of  the  foreign  state 
or  country.  §§  4,  62. 

Consolidation  or  Merger.  Is  permitted  to  corporations  carrying 
on  similar  businesses.  § 75.  Procedure  is  given.  §§  76-79.  Two- 
thirds  vote  of  the  stockholders,  three  weeks’  publication  of  notice, 
and  filing  and  recording  as  of  original  certificate  of  incorporation  are 
required.  § 77. 

Amendment  of  Charter.  Before  filing  the  certificate  of  organi- 
zation, any  changes,  within  the  law,  may  be  made  in  the  certificate  of 
incorporation  on  written  consent  of  all  the  subscribers  to  the  capital 
stock.  § 73.  Corporations  may  change  name,  the  nature  of  business 
and  location;  may  increase  or  reduce  the  amount  of  authorized  capital 
stock;  may  create  one  or  more  classes  of  stock,  or  make  any  other 
amendments,  on  vote  of  two-thirds  of  each  class  of  the  outstanding 
stock,  at  a meeting  duly  called  to  consider  such  amendment.  A certifi- 
cate of  its  adoption  must  be  made  and  filed  by  a majority  of  the 
directors.  § 74. 

7.  Capital  Stock. 

Amount.  Must  be  not  less  than  $2,000.  § 63.  No  maximum 

limited. 

Initial  Payment.  Must  be  not  less  than  $1,000.  § 63. 

Consideration  for  Issue.  If  stock  is  paid  for  otherwise  than  in 
cash,  a majority  of  the  directors  must  make  and  sign  on  the  records 
of  the  corporation  a statement  showing  particularly  the  property 
received  and  that  it  has  an  actual  value  equal  to  the  amount  for 


64 


CLASSIFIED  CORPORATION  LAWS. 


which  it  was  received.  § 12.  The  judgment  of  the  directors  as  to 
such  value  is  final;  but  for  fraudulent  overvaluation  they  are  person- 
ally liable.  The  secretary  must  keep  a record  of  the  directors  con- 
curring in  any  valuation  of  property.  § 12.  The  directors  may  call 
in  subscriptions  by  instalments  in  such  proportions  and  at  such  times 
and  places  as  they  think  proper,  on  such  notice  as  the  by-laws  pro- 
vide, and  if  no  provision  exists,  on  reasonable  notice  of  amount,  time 
and  place.  § 13. 

Increase  or  Decrease.  Is  accomplished  by  amendment  of  certifi- 
cate of  incorporation.  Issue  of  additional  authorized  stock  may  be 
made  on  vote  of  stockholders  at  a meeting  named  and  held  for  that 
purpose.  § 71.  And  the  facts  of  such  issue  must  be  certified  by  a 
majority  of  the  directors,  in  form  substantially  as  for  the  certificate 
of  organization,  at  the  time  of  filing  the  next  annual  report.  Id. 

In  case  of  reduction  the  name  of  every  stockholder  voting  in 
favor  thereof  must  appear  of  record,  and  a certificate  of  such  reduc- 
tion must  be  filed  in  the  office  of  the  Secretary  of  State  and  published 
twice  a week  for  two  successive  weeks  within  thirty  days  from  the 
date  of  the  vote.  § 6. 

Classes  of  Stock.  May  be  provided  for  with  terms  of  issue,  in 
certificate  of  incorporation.  §§  59,  63. 

Par  Value  of  Shares.  Must  be  not  less  than  $25.  Must  be  stated 
in  certificate  of  incorporation.  § 63. 

Stock  Certificates.  Certificates  must  not  be  issued  until  the  stock 
has  been  subscribed  and  paid  for  in  full.  On  first  payment  the 
treasurer’s  receipt,  countersigned  by  the  secretary,  is  given  under  the 
corporate  seal,  stating  the  amount  paid  and  the  number  of  shares  of 
full-paid  and  non-assessable  stock  to  which  the  subscriber  or  his 
transferee  will  be  entitled  on  payment  of  the  balance.  Dates  and 
amounts  of  subsequent  payments  are  entered  on  the  same  receipt 
and  the  persons  holding  the  same  are  deemed  stockholders.  § 12. 
On  full  payment  and  surrender  of  receipt,  stockholder  is  entitled  to 
certificate  under  the  corporate  seal,  signed  by  the  president  or  vice- 
president,  and  by  the  treasurer  or  secretary  or  the  assistants  of  either. 
§ 15.  No  certificates  are  issued  for  fractional  shares.  § 17.  A new 
certificate  or  treasurer’s  receipt  may  be  issued  if  original  has  been 
lost  or  destroyed.  Bond  may  be  required.  § 19. 

Transfer  of  Stock.  Transfers  and  pledges  of  stock  must  be  made 
on  the  books  of  the  corporation  in  such  form  as  the  by-laws  may 
prescribe.  §§  20,  21. 

8.  Stockholders. 

Rights  and  Powers.  After  approval  of  certificate  of  incorpora- 
tion, and  pending  complete  organization,  the  incorporators  are  vested 
with  the  corporate  powers,  and  may  take  necessary  steps  to  obtain 
subscriptions  to  stock.  § 66.  Stockholders  may  make  amendments 
to  the  charter  by  two-thirds  vote.  § 74.  One-tenth  of  the  stock- 
holders may  obtain  redress  by  petition  to  Court  of  Equity  against 
wrongful  act  of  directors,  and  may  also  compel  meetings.  §§  23,  24, 
26.  They  control  the  issuance  of  authorized  stock.  § 71.  They  are 
entitled  to  an  annual  report  of  the  financial  condition  of  the  com- 


CONNECTICUT. 


65 


pany,  including  a statement  of  stock  or  securities  held  by  it  in  other 
corporations.  § io.  Any  stockholder  may  apply  for  mandamus  to 
compel  corporation  to  obey  statutes.  R.  S.,  § 1022;  Corporation  v. 
Whitlock,  75  Conn.,  669. 

Liability.  Stockholders  are  liable  for  unpaid  subscriptions.  § 15. 
They  are  jointly  and  severally  liable  for  any  reduction  of  stock  voted 
by  them  which  renders  company  insolvent,  to  the  extent  of  the  cor- 
porate debts  existing  at  the  time  of  the  reduction.  Stockholders  not 
voting  in  favor  of  such  reduction  are  not  liable.  § 6.  Judgment  and 
execution  returned  unsatisfied  against  corporation  are  prerequisite 
to  recovery  against  stockholders.  § 6. 

Corporation  has  a lien  on  shares  for  debts  and  unpaid  instalments 
and  may  sell  such  shares  on  twenty  days’  notice  by  mail,  and  adver- 
tising twice  not  less  than  one  week  prior  to  the  date  of  sale.  § 21. 

Meetings.  Must  be  held  in  the  State.  § 22. 

Notice.  Must  be  given  personally  or  by  mail  at  least  five  days 

before  the  meeting.  § 22.  Special  meetings  may  be  called  by  the 

president  and  may  be  compelled  by  one-tenth  of  the  stock.  § 23. 
Notice  may  be  waived  in  writing  by  all  the  stockholders,  in  person  or 
by  attorney.  Id. 

Quorum.  Not  prescribed  by  law. 

Voting.  May  be  by  proxy,  but  no  proxy  is  valid  for  more  than 
eleven  months  from  its  date,  unless  a longer  period  is  expressly  pro- 
vided for  therein.  § 25;  L.  1905,  Ch.  171.  Every  share  of  stock  is 

entitled  to  one  vote,  unless  otherwise  provided  in  the  certificate  of 

incorporation.  § 25.  Cumulative  voting  may  be  provided  for  in 
certificate  of  incorporation.  § 64. 

9.  Directors. 

Number.  Must  be  three  or  more  (§  10),  as  fixed  by  by-laws.  § 3. 
Change  of  number  is  not  provided  for,  but  may  obviously  be  made  by 
amending  by-laws.  §§  3,  22.  They  may  be  classified,  but  if  so,  one  or 
more  classes  must  be  elected  each  year,  and  no  class  may  be  elected 
for  less  than  one  year  nor  for  more  than  five.  § 10.  Directors  are 
named  in  the  certificate  of  organization  and  in  annual  reports. 
§§  37,  69. 

Qualifications.  They  must  be  stockholders.  § 10. 

Powers.  They  may  adopt  additional  by-laws,  subject  to  those  of 
the  stockholders.  They  may  fill  vacancies  on  the  board  and  may 
appoint  an  executive  and  other  committees.  § 10.  Their  judgment  of 
value  of  property  or  services  taken  in  payment  of  stock  subscription 
is  final.  § 12.  They  vote  all  dividends  and  any  distribution  of  as- 
sets. § 5. 

Liability.  For  fraudulent  overvaluation  of  property  taken  in 
payment  for  stock,  they  render  themselves  jointly  and  severally  liable 
to  the  corporation  for  the  difference  between  their  valuation  and 
the  actual  value.  § 12.  For  payments  of  dividends  or  distribution  of 
assets  except  from  net  profits  or  actual  surplus,  each  voting  director 
is  liable  to  fine  of  not  more  than  $500.  If  such  payment  or  distribu- 
tion renders  the  corporation  insolvent,  the  voting  directors  are  jointly 
and  severally  liable  for  the  corporate  debts  at  the  time  of  the  vote. 


66 


CLASSIFIED  CORPORATION  LAWS. 


Judgment  and  execution  returned  unsatisfied  against  corporation  are 
prerequisite  to  recovery.  § 5.  For  any  purchase  of  the  corporation’s 
own  stock,  when  it  is  insolvent,  or  which  renders  it  insolvent,  the 
directors  assenting  thereto  render  themselves  liable  for  all  the  cor- 
porate debts  existing  at  the  time  of  the  purchase.  §11. 

Meetings.  No  statutory  requirements  as  to  place  or  notice.  May 
be  fixed  by  by-laws.  § 10;  New  Haven  Trust  Co.  v.  Dougherty,  75 
Conn.  555.  A quorum  is  to  be  a majority  unless  the  stockholders’ 
by-laws  provide  for  a less  number.  § 10. 

Executive  Committee.  Expressly  authorized.  § 10. 

10.  Officers. 

General.  A president  must  be  elected  from  among  the  directors. 
A treasurer  and  secretary  are  also  prescribed,  and  such  other  officers 
as  the  by-laws  direct.  The  same  person  may  fill  the  office  of  presi- 
dent and  treasurer,  or  of  secretary  and  treasurer.  § 70.  They  are 
named  in  the  certificate  of  organization  and  in  annual  reports. 
§§  37,  69. 

Officers  are  liable  to  fines  of  $100  for  failure  to  file  annual  report 
(§  37)  and  for  refusing  to  give  information  from  stock  books  when 
demanded  by  creditors.  § 39.  Failure  to  produce  lists  of  stock- 
holders at  election  renders  them  ineligible  to  office.  § 18.  And  a 
general  fine,  not  to  exceed  $1,000,  is  prescribed  for  any  violation  of 
the  act.  § 45;  New  Haven  Trust  Co.  v.  Dougherty,  75  Conn.  555. 
(See  § 9,  “ Directors.”) 

11.  Principal  Office. 

Every  corporation  must  be  located  in  some  town  in  the  State. 
§ 2.  A home  office  must  be  designated  in  the  certificate  of  incorpora- 
tion. § 63.  It  may  be  changed  by  amendment.  § 74.  It  is  desig- 
nated in  the  annual  report,  together  with  the  name  of  an  agent  or 
person  in  charge  thereof  on  whom  process  may  be  served.  § 37. 


12.  Corporate  Books. 

What  Required.  A stock  book  is  required,  to  contain  the  names 
and  addresses  of  stockholders  and  the  number  of  shares  held.  §§  18, 
20,  21.  Secretary  is  required  to  record  votes  of  stockholders  and  di- 
rectors voting  on  dividends  or  reduction  of  stock,  etc.  §§  5,  6. 

Where  Kept.  The  original  or  duplicate  stock  books  must  be 
kept  at  the  principal  office  or  place  of  business  in  the  State.  § 18. 

Examination  of.  The  books  must  at  all  times  during  usual  busi- 
ness hours  be  open  to  examination  by  the  stockholders  (§  18),  and 
the  person  in  charge  of  the  books  must  furnish  information  therefrom 
on  demand  of  creditors  of  stockholders.  § 39.  Financial  statements 
must  be  rendered  stockholders  at  least  once  each  year.  § 10. 


CONNECTICUT. 


67 


13.  Reports. 

The  president  and  treasurer  must  annually,  on  or  before  February 
15th  or  August  15th,  make,  verify,  file  and  record  in  the  office  of  the 
Secretary  of  State,  a certificate  setting  forth,  as  of  January  or  July 
1st  next  preceding:  (1)  The  name,  residence  and  post-office  address 
of  each  of  its  officers  and  directors.  (2)  Amount  of  its  outstanding 
capital  stock  which  has  not  been  paid  for  in  full,  with  the  amount 
due  thereon.  (3)  Location  of  its  principal  office  in  this  State,  with 
street  and  number,  if  any,  and  the  name  of  the  agent  or  person  in 
charge  thereof  on  whom  process  may  be  served.  A certified  copy  is 
also  recorded  in  the  office  of  the  Town  Clerk  of  the  town  in  which 
the  corporation  is  located.  § 37.  This  report  need  not  be  made  when 
the  corporation  is  in  the  hands  of  a receiver.  L.  1905,  Ch.  267. 

Publication  is  only  required  for  notices  of  reduction  of  capital 
stock  and  for  first  meetings  of  stockholders.  This  last  may  be  avoided 
by  waiver. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation,  ex- 
cept insurance  and  surety  companies  and  building  and  loan  associa- 
tions, concerning  which  there  are  special  laws,  must  before  transact- 
ing business  in  the  State,  file  in  the  office  of  the  Secretary  of  State 
a certified  copy  of  its  charter  or  certificate  of  incorporation,  together 
with  a statement,  signed  and  sworn  by  its  president,  treasurer  and  a 
majority  of  its  directors,  showing  the  amount  of  its  authorized  capital 
stock  and  amount  thereof  paid  in;  and  if  any  part  has  been  paid  other- 
wise than  in  cash,  the  particulars  of  such  payment.  § 82.  Fees  on 
filing  certified  copy  of  its  charter,  $10,  and  for  filing  the  statement 
required,  $5.  R.  S.  1902,  § 4811.  The  Secretary  of  State  must  be 
appointed  its  attorney  on  whom  process  may  be  served,  by  an 
acknowledged  statement  agreeing  to  such  mode  of  service.  § 83. 
They  are  subject  to  the  same  regulations  and  penalties  as  domestic 
corporations.  §§  81,  86,  88. 

Penalties  for  Non-Compliance.  Fine  of  not  more  than  $1,000 
imposed  on  every  officer  or  agent  guilty  of  violation;  and  Attorney 
General  is  to  institute  proceedings  restraining  the  corporation  from 
further  prosecution  of  business  in  the  State.  But  its  contracts  are 
not  invalidated.  § 85. 

Books.  Same  as  of  domestic  corporations. 

Reports.  Annual  report  is  required  to  be  filed  and  recorded  at 
the  same  time  and  in  the  same  form  as  required  of  domestic  corpora- 
tions, except  that  agent  need  not  be  named.  § 87.  Certificates  must 
be  filed  with  Secretary  of  State  of  increase  or  decrease  of  stock  the 
same  as  by  domestic  corporations.  § 86. 

Attachments  Against.  No  special  provisions. 

15.  Combinations  and  Monopolies. 

Not  provided  against  by  special  law. 


DELAWARE. 


1.  Corporation  Laws.* 

Constitution.  (1897.)  All  corporations  must  be  formed  under 
general  laws,  except  municipal  corporations,  banks,  or  corporations 
for  charitable,  penal,  reformatory  or  educational  purposes,  sustained 
in  whole  or  in  part  by  the  State.  Const.,  Art.  IX,  § 1.  No  corpora- 
tion shall  issue  stock  except  for  money  paid,  labor  done,  or  personal 
property,  or  real  estate  or  leases  thereof  actually  acquired  by  such 
corporation;  and  neither  labor  nor  property  shall  be  received  in 
payment  of  stock  at  a greater  price  than  the  actual  value  at  the 
time  such  labor  was  done  or  property  delivered  or  title  acquired. 
Id.,  § 3.  Foreign  corporations  must  have  an  agent  in  the  State  upon 
whom  process  may  be  served.  Id.,  § 5.  In  all  elections  for  directors 
or  managers  of  stock  corporations  each  shareholder  shall  be  entitled 
to  one  vote  for  each  share  of  stock  he  may  hold.  Id.,  § 6. 

Statutes.  The  General  Corporation  Law  is  found  in  the  Laws  of 
1903?  Ch.  394.  Amendments  are  found  in  L.  1905,  Chs.  154-156.  Cor- 
porations may  be  organized  under  this  law  for  any  lawful  business, 
or  to  promote  or  conduct  any  legitimate  object  or  purpose  except 
banking.  § 1.  Business  corporations  and  corporations  for  construct- 
ing, maintaining  and  operating  railroads,  telegraph  or  telephone  lines 
outside  the  State,  may  be  organized  and  conducted  under  the  general 
provisions  of  this  law,  but  railroad,  building  and  loan,  steam,  heat 
and  power,  electric,  gas  and  water,  and  telegraph  and  telephone  com- 
panies formed  to  operate  within  the  State,  are  subject  to  special 
provisions  and  requirements.  § 1. 

Foreign  corporations  are  subject  to  the  provisions  of  Chapter  395 
of  the  Laws  of  1903.  Banking  corporations  are  formed  by  special 
enactment.  The  Franchise  Tax  Law  is  contained  in  L.  1901,  Ch.  15. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State  on  filing  certifi- 
cate of  incorporation,  15  cents  for  each  $1,000  of  authorized  capital, 
but  in  no  case  less  than  $20.  § 129. 

To  Secretary  of  State  for  filing  and  indexing  certificate  of  incor- 
poration, $2.  For  certifying  copy  of  same,  according  to  length,  usually 
$4  to  $5. 

To  Recorder  of  Deeds  for  recording  certificate  of  incorporation, 
according  to  length,  usually  $4  to  $5. 

* References,  except  where  otherwise  noted,  are  to  the  Laws  of  1903,  Ch.  394. 

68 


DELAWARE. 


69 


Franchise  Tax.  An  annual  franchise  tax  is  imposed  on  business 
corporations  as  follows:  One-twentieth  of  one  per  cent,  on  all  amounts 
of  capital  actually  paid  in,  up  to  and  including  the  sum  of  $3,000,000; 
on  all  capital  stock  issued  and  outstanding  in  excess  of  this  amount 
and  not  exceeding  $5,000,000,  one-fortieth  of  one  per  cent.,  and  the 
further  sum  of  $30  per  annum  for  every  $1,000,000  or  any  part  thereof, 
issued  and  outstanding,  in  excess  of  $5,000,000.  Franchise  Tax  Law, 
§ 4- 

Manufacturing  and  mining  corporations  having  at  least  50  per 
centum  of  their  issued  and  outstanding  capital  stock  invested  in  busi- 
ness carried  on  within  the  State,  are  exempt  from  this  franchise  tax. 
If  less  than  50  per  centum  of  the  capital  stock  is  so  invested  within 
the  State,  the  assessed  value  of  real  and  personal  property  within 
the  State  is  deducted  from  the  amount  of  the  issued  and  outstanding 
capital  stock  before  computation  of  the  franchise  tax.  Id.,  § 4. 

The  franchise  tax  is  based  upon  an  annual  report  to  be  filed  with 
the  Secretary  of  State  on  or  before  the  first  day  of  January.  (See 
“Reports.”)  If  not  paid  on  or  before  the  first  of  May,  a penalty  is 
imposed  of  one  per  cent,  per  month  until  the  amount  is  paid.  It 
may  be  collected  by  an  action  at  law  when  in  arrears  for  one  month 
and  is  a preferred  claim  in  case  of  insolvency.  Id.,  §§  5,  6. 

Telegraph,  telephone,  gas,  electric  and  insurance  corporations,  and 
the  like,  are  required  to  make  special  reports  and  are  subject  to 
varying  rates  of  franchise  taxation. 

Local  Taxation.  Shares  of  stock  or  bonds  of  domestic  corpora- 
tions held  by  non-residents  or  foreign  corporations  are  not  taxed. 
§ 16.  Shares  of  stock  held  by  residents  are  taxed  on  the  basis  of 
three-fourths  of  their  market  value.  21  Del.  Laws,  Ch.  25. 

General.  $20  must  be  paid  the  Secretary  of  State  on  filing  an 
amended  certificate  of  incorporation,  if  not  increasing  authorized 
capital  stock,  and  the  same  amount  on  filing  a certificate  of  dissolu- 
tion, change  of  name,  decrease  of  capital  stock,  decrease  of  number 
of  shares  of  stock,  or  of  renewal  of  existence.  On  increase  of  capital 
stock,  fee  to  Secretary  of  State  is  15  cents  for  each  $1,000  of  such 
increase,  but  in  no  case  less  than  $20.  All  other  certificates,  $5.  For 
receiving,  filing  and  indexing  any  papers  required  to  be  filed,  $2. 
§§  129,  133. 

To  Recorder  of  Deeds  for  filing  amended  certificate  of  incorpora- 
tion, according  to  length,  but  usually  about  $4.50. 


3.  Incorporation. 

Incorporators.  May  be  any  number  not  less  than  three.  No 
statutory  requirements  as  to  residence.  § 1.  .Until  the  directors  are 
elected  the  incorporators  have  direction  of  the  affairs  and  organiza- 
tion of  the  corporation  and  may  take  all  proper  steps  to  secure  sub- 
scriptions to  stock  and  to  perfect  its  organization.  § 8. 

Certificate  of  Incorporation.  Must  be  signed  and  sealed  by  each 
of  the  original  subscribers  to  the  capital  stock,  and  acknowledged  by 
each  of  them  before  some  officer  authorized  under  the  laws  of  Dela- 
ware to  take  acknowledgments  of  deeds.  § 6.  In  practice  the  signa- 
tures of  the  incorporators  are  witnessed.  This  certificate  must  set 
forth  (§  5): 


70 


CLASSIFIED  CORPORATION  LAWS. 


(1)  Name  of  the  corporation,  which  name  shall  contain 

one  of  the  words,  “association,”  “company,”  “corporation,” 
“club,”  “incorporated,”  “society,”  “union”  or  “syndicate,”  and 
shall  be  such  as  to  distinguish  it  from  any  other  corporation 
engaged  in  the  same  business  of  promoting  or  carrying  on 
the  same  objects  or  purposes  in  the  State.  The  corporate 
name  must  be  prominently  displayed  on  the  principal  office 
or  place  of  business  under  penalty  of  fine  of  not  less  than 
$100  nor  more  than  $500.  § 5. 

(2)  Name  of  the  city  or  town,  county,  or  place  within 
the  county  in  which  its  principal  office  or  place  of  business 
is  to  be  located  in  the  State. 

(3)  Nature  of  the  business,  or  objects,  or  purposes  pro- 
posed to  be  transacted,  promoted  or  carried  on. 

(4)  Amount  of  the  total  authorized  capital  stock,  which 
shall  not  be  less  than  $2,000;  the  number  of  shares  into  which 
the  same  is  divided  and  the  par  value  of  each  share;  the 
amount  of  capital  stock  with  which  it  will  commence  busi- 
ness, which  shall  not  be  less  than  $1,000;  and  if  there  be  more 
than  one  class  of  stock,  a description  of  each  class  and  a 
statement  of  the  terms  of  its  creation. 

(5)  Name  and  place  of  residence  of  each  of  the  original 
subscribers  to  the  capital  stock. 

(6)  Whether  or  not  the  corporation  is  to  have  perpetual 
existence;  if  not,  the  time  when  its  existence  is  to  commence, 
and  the  time  when  its  existence  is  to  cease. 

(7)  Whether  the  private  property  of  the  stockholders  shall 
be  subject  to  payment  of  the  corporate  debts,  and  if  so,  to 
what  extent. 

(8)  Any  additional  provisions  not  contrary  to  the  laws  of 
the  State  which  the  incorporators  may  choose  to  insert  for 
the  regulation  and  conduct  of  the  business  and  the  affairs  of 
the  corporation,  and  creating,  defining,  limiting  and  regulat- 
ing the  powers  of  the  corporation,  the  directors  and  the 
stockholders  or  any  classes  of  the  stockholders. 

If  business  is  to  be  conducted,  offices  maintained  and  property 
held  outside  the  State,  such  powers  must  be  set  forth  in  the  certificate 
of  incorporation.  § 2.  Power  to  make  and  alter  by-laws  may  be 
conferred  on  the  directors  by  charter  provision.  § 12.  Also  directors 
may  be  classified  (§  9),  and  be  given  power  to  fix  amount  to  be  re- 
served as  working  capital.  § 34. 

Filing  and  Recording.  The  duly  executed  certificate  of  incor- 
poration and  a copy  thereof  for  certification  are  sent  to  the  Secretary 
of  State.  The  required  fees  (See  “Organization  Expenses”  under  § 2) 
must  accompany  same.  If  in  proper  form  the  Secretary  files  and 
records  the  original  certificate  in  his  office  and  returns  the  copy  duly 
certified. 

This  certified  copy  must  then  be  recorded  in  the  office  of  the 
Recorder  of  Deeds  of  the  county  in  which  the  principal  office  of  the 
corporation  within  the  State  is  located.  § 6. 


DELAWARE. 


7 1 


4.  Organization. 

First  Meetings.  The  first  meeting  of  stockholders  may  be  held 
within  or  without  the  State,  though  the  better  practice  is  to  meet 
within  the  State.  § 30.  The  meeting  may  be  called  by  notice  signed 
by  a majority  of  the  incorporators  and  published  three  times  in  a 
local  paper  at  least  two  weeks  before  the  time  of  meeting  or  by  two 
days’  notice  served  personally  on  the  incorporators;  or,  as  is  the 
general  practice,  it  may  be  held  without  notice,  on  waiver  and  consent 
signed  by  all  the  incorporators.  §11.  Notice  of  this  meeting  should 
specify  the  time,  place  and  purposes.  The  waiver  and  consent  specifies 
the  time  and  place  and  usually  includes  a general  consent  to  the 
special  objects  of  the  meeting  and  to  the  transaction  of  any  other 
business  relating  to  the  affairs  of  the  company.  The  incorporators 
may  be  represented  at  this  meeting  by  proxies.  The  use  of  “dummy” 
incorporators  and  directors  is  common. 

At  this  meeting  by-laws  should  be  adopted  (See  “By-Laws”)  and 
directors  for  the  first  year  are  elected.  (See  § 9,  “Directors.”)  If 
stock  is  to  be  issued  for  property,  a resolution  is  usually  passed  at 
this  meeting,  approving  the  exchange  and  authorizing  the  directors 
to  effect  the  same.  (See  § 7,  “Capital  Stock.”) 

The  first  meeting  of  directors  usually  follows  close  upon  the 
first  meeting  of  stockholders.  It  can  be  called  as  prescribed  in  the 
by-laws  for  special  meetings  of  the  board,  but  is  usually  assembled 
by  means  of  a waiver  of  notice  signed  by  all  the  directors.  At  this 
meeting  officers  are  elected  for  the  first  year  (See  § 10,  “Officers”) 
and,  if  stock  is  to  be  issued  for  property,  or  sold  for  cash,  provision 
is  made  therefor  by  suitable  resolution.  (See  § 7,  “Capital  Stock.”) 
Such  other  steps  as  are  necessary  to  perfect  the  organization  of  the 
corporation,  as  selection  of  bank,  arrangements  for  office,  provision 
for  incorporating  expenses,  etc.,  are  usually  taken  at  this  meeting. 

By-Laws.  May  be  adopted  by  the  directors  if  the  certificate 
of  incorporation  gives  them  that  power.  But  the  stockholders  retain 
always  the  power  to  revise  or  repeal.  § 12. 

Besides  the  usual  provisions,  the  by-laws  should  prescribe  whether 
officers  are  to  be  elected  by  stockholders  or  directors,  may  provide 
for  an  executive  committee  (§  9),  for  meetings  of  both  stockholders 
and  directors,  and  for  maintenance  of  offices  outside  the  State,  if  any 
such  are  to  be  maintained.  § 32. 

Election  of  Officers.  Officers  are  elected  either  by  the  stock- 
holders or  directors  as  the  by-laws  may  prescribe.  The  president 
must  be  a member  of  the  board.  One  person  may  fill  the  office  of 
both  secretary  and  treasurer.  The  vice-president  may  also  fill  the 
position  of  secretary  or  treasurer  but  not  both.  § 10.  (See  § 10, 
“Officers.”) 

Certificates.  None  are  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  completion  of  filing  and  recording  of 
certificate  of  incorporation  and  on  payment  of  license  tax.  § 7. 
May  be  perpetual  if  so  provided  in  the  certificate  of  incorporation. 


72 


CLASSIFIED  CORPORATION  LAWS. 


§ 5.  Continues  three  years  after  expiration  or  dissolution  for  the 
purpose  of  closing  corporate  affairs.  § 40. 

Beginning  Business.  The  corporate  operations  may  be  com- 
menced forthwith  and  must  be  commenced  in  good  faith  within  two 
years.  § 67. 

Renewal.  Is  accomplished  by  filing  in  the  same  manner  as  the 
original  certificate  of  incorporation  (§  132),  a certificate  executed  by 
the  president  and  secretary,  setting  forth  (§  131):  (1)  Existing  name 

of  the  corporation.  (2)  Name  of  the  city,  town  or  place  within  the 
county  in  which  its  principal  office  or  place  of  business  in  the  State 
is  located.  (3)  Date  when  such  renewal  is  to  commence,  which 
must  be  prior  to  the  date  of  expiration  of  the  first  charter;  whether 
or  not  the  renewal  is  to  be  perpetual,  or,  if  not  perpetual,  the  time 
it  is  to  continue.  (4)  That  the  corporation  is  duly  organized  and 
carrying  on  the  business  authorized  by  its  existing  charter.  The  Laws 
of  1905,  Ch.  156,  provide  for  renewal  in  similar  manner,  before 
January  1,  1906,  of  corporations  which,  through  inadvertence,  have 
failed  to  renew,  as  above,  and  expired  since  January  1,  1903. 

Renewal  fee  is  $20.  § 133.  Corporations  organized  prior  to  1897 

must  file  with  the  Secretary  of  State  an  acceptance  of  the  provisions 
of  the  State  Constitution  of  that  year  before  they  may  renew  their 
corporate  existence.  Const.,  Art.  IX,  § 2. 

Forfeiture  of  Charter.  Is  prescribed  on  failure  to  commence  busi- 
ness or  promote  the  corporate  objects  for  two  years  after  incorporation 
(§  67),  and  also  on  failure  to  pay  taxes  for  the  same  length  of  time 
(Franchise  Tax  Law,  § 10),  unless  the  time  for  such  payment  be 
formally  extended  by  the  Governor  of  the  State.  These  provisions 
are  made  effective  by  proclamation  issued  by  the  Governor,  declar- 
ing the  charter  repealed.  Acting  under  a repealed  charter  is  declared 
a misdemeanor,  punishable  by  imprisonment  or  fine,  not  to  exceed 
one  year  and  $1,000  respectively,  or  both.  Id.,  § 13;  Const.,  Art.  IX, 

§ 1. 


Dissolution.  May  be  effected  by  the  incorporators  before  any 
part  of  the  capital  stock  has  been  paid  and  before  beginning  busi- 
ness, by  due  certification  of  these  facts  and  surrender  of  the  corporate 
franchises.  § 38. 

Thereafter  a corporation  may  be  dissolved  by  unanimous  written 
consent  of  the  stockholders,  without  other  formality  than  the  filing 
of  this  consent  in  the  office  of  the  Secretary  of  State,  and  his  issuance 
of  a certificate  of  dissolution.  § 39. 

If  this  unanimous  consent  can  not  be  secured,  dissolution  may 
be  effected  by  resolution  of  a majority  of  the  directors,  properly 
published,  formally  consented  to  by  two-thirds  in  interest  of  the  stock- 
holders and  this  consent  duly  certified  to  the  Secretary  of  State,  who, 
if  the  proceedings  are  in  due  form,  issues  a certificate  that  such  con- 
sent has  been  filed.  This  certificate  must  also  be  duly  published,  and, 
upon  verification  thereof  to  the  Secretary  of  State,  the  corporation  is 
dissolved.  § 39. 

Provisions  for  receivers  and  adjustment  of  debts,  etc.,  are  con- 
tained in  §§  40-58. 


DELAWARE. 


73 


6.  Corporate  Powers. 

General.  The  general  powers  conferred  by  the  statute  are  broad. 
§§  2,  3.  Banking  powers  are  prohibited.  § 4. 

To  Hold  Property.  This  power  is  granted  without  limitation. 
§ 2,  par.  4. 

Its  Own  Stock.  Authority  for  this  is  indirectly  given 
in  §§  19,  28  and  36.  The  corporation  may  take  shares  by  forfeiture 
for  non-payment  of  assessments.  § 22.  Shares  of  stock  of  the  cor- 
poration belonging  to  the  corporation  shall  not  be  voted  upon  directly 
or  indirectly  (§  19),  and  officers  are  forbidden  to  loan  funds  of  a 
corporation  to  a stockholder  on  security  of  its  own  stock.  § 36. 

Stock  of  Other  Corporations.  This  power  is  expressly 
and  broadly  conferred.  § 135. 

To  Borrow  Money.  There  are  no  restrictions  on  this  power. 
§ 2,  par.  4.  The  capital  stock  must  not  be  decreased  in  any  man- 
ner to  an  amount  less  than  the  unsecured  debts.  §§  27,  28.  Bond- 
holders may  be  given  same  rights  as  stockholders.  § 29. 

To  Do  Business  in  Other  States.  This  power  is  fully  granted 
but  must  be  stated  in  the  certificate  of  incorporation  among  the  cor- 
porate objects.  § 2,  par.  8;  § 32. 

Consolidation  or  Merger.  Is  fully  provided  for.  §§  59-64.  Such 
consolidated  corporation  may  be  either  one  of  the  consolidated  cor- 
porations or  a new  corporation.  Fee  to  Secretary  of  State,  15  cents 
on  each  $1,000  of  capital  stock  beyond  the  total  authorized  capital 
of  the  consolidated  corporations,  but  in  no  case  less  than  $20.  § 129. 

Stockholders  of  corporations  who  have  made  written  objection  to 
consolidation  thereof  may,  within  twenty  days  after  an  agreement 
of  consolidation  has  been  filed,  make  written  demand  for  payment 
for  their  stock  and  the  corporation  shall  within  three  months  there- 
after pay  them  the  value  of  their  stock  at  the  time  of  consolidation; 
value  of  stock  to  be  determined  if  necessary  by  arbitration.  § 61. 
Consolidation  of  telegraph  and  telephone  companies  to  form  con- 
tinuous lines  is  specifically  provided  for.  § 105;  amendment  of  L. 
1905,  Ch.  155. 

Amendment  of  Charter.  Before  payment  of  any  part  of  the 
capital  stock,  the  certificate  of  incorporation  may  be  modified,  changed 
or  altered  in  whole  or  in  part,  by  an  amended  certificate,  duly  signed 
and  acknowledged  by  the  original  incorporators  and  filed  and  recorded 
as  was  the  original  instrument.  § 25. 

After  payment  of  any  part  of  the  capital  stock,  the  certificate  of 
incorporation  may  be  amended  from  time  to  time,  when  and  as  de- 
sired, either  by  addition  to  its  corporate  powers  and  purposes,  or 
diminution  thereof;  or  by  substitution  of  other  powers  and  purposes, 
in  whole  or  in  part;  or  by  increasing  or  decreasing  its  authorized 
capital  stock  (See  “Capital  Stock”);  or  by  changing  the  number  and 
par  value  of  its  shares;  or  by  change  of  its  name;  by  a majority 
vote  of  its  stock,  or  each  class  thereof,  cast  at  a meeting  duly  called 
for  that  purpose.  Such  meeting  must  be  held  in  pursuance  of  a reso- 
lution of  the  directors,  be  duly  notified  to  the  stockholders,  and  the 


74 


CLASSIFIED  CORPORATION  LAWS. 


vote  be  supervised  by  two  judges,  who,  if  the  amendment  is  passed, 
certify  thereto  in  duplicate.  A certificate  is  then  made  by  the  cor- 
poration, under  its  corporate  seal  and  the  hands  of  its  president  and 
treasurer,  setting  forth  the  facts.  This  is  acknowledged  by  the  presi- 
dent, the  certificate  of  the  judges  is  attached,  and  the  instrument  is 
then  filed  and  recorded  as  was  the  original  certificate  of  incorpora- 
tion. § 26. 

7.  Capital  Stock. 

Amount.  Must  not  be  less  than  $2,000.  § 5.  No  maximum  limit. 

Initial  Payment.  At  least  $1,000  must  have  been  subscribed  for 
before  the  corporation  commences  business  (§  5) ; but  there  is  no 
provision  as  to  time  of  payment  or  requirement  that  such  subscription 
be  paid  in  cash.  § 14.  On  written  request  of  any  creditor  or  stock- 
holder, the  officers  must  file  with  the  Secretary  of  State  a certificate 
showing  the  amounts  paid  in  cash  or  property  and  the  total  amount 
of  capital  stock  issued.  § 23. 

Consideration  for  Issue.  May  be  cash,  labor  done,  personal  prop- 
erty, or  real  property  or  leases  thereof,  and  stock  so  issued  shall  be 
declared  and  taken  to  be  full  paid  stock  and  not  liable  to  any  further 
calls.  In  the  absence  of  actual  fraud  in  the  transaction  the  judgment 
of  the  directors  as  to  the  value  of  such  labor,  property,  real  estate  or 
leases  shall  be  conclusive.  § 14  as  amended  by  L.  1905,  Ch.  155.  But 
the  Constitution,  Art.  IX,  § 3,  provides  that  “Neither  labor  nor  prop- 
erty shall  be  received  in  payment  of  stock  at  a greater  price  than  the 
actual  value  at  the  time  such  labor  was  done  or  property  delivered 
or  title  acquired.”  The  conflict  possible  under  these  provisions  be- 
tween the  statutes  and  the  Constitution  has  not  been  adjudicated. 

Assessments  may  be  made  by  the  directors  in  their  discretion  for 
any  amount  up  to  the  unpaid  balance  on  shares,  on  thirty  days’ 
notice  by  publication  or  mailing.  § 21.  On  non-payment  they  may 
sue,  or  proceed  to  sell  the  stock  at  public  auction,  on  three  weeks’ 
publication  and  twenty  days’  mailed  notice.  § 22. 

Increase  or  Decrease.  Of  authorized  capital  stock  is  accomplished 
in  the  same  manner  as  other  charter  amendments,  but  no  corpora- 
tion may  decrease  its  authorized  capital  stock  without  paying  or 
adequately  securing  its  debts.  § 26. 

Increase — or  issue — of  capital  stock  up  to  the  full  amount  fixed  by 
charter  may  be  authorized  without  special  formalities  at  any  cor- 
porate meeting.  § 27.  Decrease  of  issued  capital  stock— without 
change  of  authorized  capital  stock — may  be  effected  by  the  vote,  or 
written  consent,  of  two-thirds  in  interest  of  the  stockholders.  De- 
tailed formalities  of  notice,  filing  and  recording  of  certificate  and 
publication  of  same  are  prescribed.  § 28.  Such  reduction  may  be 
carried  into  effect  by  retiring  or  reducing  any  class  of  the  stock,  or 
by  drawing  the  necessary  number  of  shares  by  lot  for  retirement,  or 
by  decreasing  the  number  of  shares  of  each  shareholder,  or  by  the 
purchase  at  not  above  par  of  certain  shares  for  retirement,  or  by 
retiring  shares  owned  by  the  corporation,  or  by  reducing  the  par 
value  of  shares.  § 28.  No  such  reduction  shall  be  made  until  the 
corporate  debts  are  fully  secured  or  have  been  paid  and  discharged. 


DELAWARE. 


75 


Stockholders  are  not  relieved  from  liability  on  partly  paid  stock,  or 
for  corporate  debts  existing  at  that  time,  by  any  such  reduction  of 
capital.  § 28. 

Classes  of  Stock.  “Every  corporation  shall  have  power  to  create 
two  or  more  kinds  of  stock  of  such  classes,  with  such  designations, 
preferences  and  voting  powers,  or  restriction  or  qualification  thereof, 
as  shall  be  stated  and  expressed  in  the  certificate  of  incorporation.” 
§ 13.  But  the  Constitution,  Art.  IX,  § 6,  provides  that  every  stock- 
holder shall  have  one  vote  for  each  share  of  stock  owned.  All  or  any 
classes  of  stock  may  be  increased  or  decreased.  At  no  time  shall 
the  total  amount  of  preferred  stock  exceed  two-thirds  of  the  actual 
capital  paid  in,  in  cash  or  property.  Preferred  stock  may  be  made 
subject  to  redemption  at  a fixed  time  and  price,  not  below  par;  may 
be  given  a fixed  dividend,  not  exceeding  8 per  cent.,  and  such  divi- 
dend may  be  made  cumulative,  but  all  this,  as  well  as  the  creation 
of  preferred  stock,  may  only  be  done  by  proper  charter  provision. 
Holders  of  preferred  stock  shall  not  be  personally  liable  for  debts 
of  the  corporation.  In  case  of  insolvency  the  corporate  debts  and 
other  liabilities  shall  be  paid  in  preference  to  the  preferred  stock. 
§§  5,  13- 

Par  Value  of  Shares.  Not  restricted  in  any  way. 

Stock  Certificates.  Every  stockholder  shall  have  a certificate 
under  the  corporate  seal,  signed  by  the  president  and  treasurer  and 
certifying  the  number  of  shares  owned  by  him  in  the  corporation.  § 15. 

Transfer  of  Stock.  Is  to  be  made  on  the  books  of  the  company 
in  the  manner  prescribed  by  the  by-laws.  § 16.  Transfers  made  for 
collateral  security  shall  be  so  expressed  in  the  entry  of  the  transfer. 
§ 16;  Wilmington,  etc.  Co.  v.  Buch,  Harr.  44;  Allen  v.  Stewart,  7 Del., 
Ch.  287;  44  Atl.  786.  No  stock  can  be  voted  which  has  been  trans- 
ferred on  the  books  of  the  company  within  twenty  days  before  the 
election.  § 29. 

8.  Stockholders. 

Rights  and  Powers.  In  all  elections  for  directors  or  managers 
of  stock  corporations,  each  shareholder  shall  be  entitled  to  one  vote 
for  each  share  of  stock  he  may  hold.  Const.,  Art.  IX,  § 6.  At  every 
meeting  of  stockholders  each  stockholder,  whether  resident  or  non- 
resident, shall,  unless  otherwise  provided  in  the  charter  or  by-laws, 
be  entitled  to  one  vote  in  person  or  by  proxy  for  each  share  of  capital 
stock  held  by  him.  L.  1903,  Ch.  394,  § 17.  These  conflicting  pro- 
visions have  not  as  yet  been  adjudicated.  Stockholders  alone  have 
power  to  make  by-laws  unless  that  power  is  conferred  upon  the  direc- 
tors by  charter  provision.  By-laws  made  by  the  directors  under  such 
authorization  may  always  be  altered  or  repealed  by  the  stockholders. 
§ 12.  Amendments  to  charter,  decrease  of  issued  stock,  merger  or 
consolidation  and  dissolution  all  require  the  concurrence  of  the  stock- 
holders. §§  25-28,  38,  39,  59-64.  They  have  full  right  to  examine  the 
stock  books  during  usual  business  hours.  § 29.  Any  stockholder  may 
demand  a certificate  of  amounts  paid  on  capital  stock  and  amount  of 
stock  issued.  § 23.  Any  stockholder  may  compel  election  of  direc- 
tors through  chancellor.  § 31. 


76 


CLASSIFIED  CORPORATION  LAWS. 


Liability.  Each  stockholder  is  liable  for  the  corporate  debts  to 
the  extent  of  the  unpaid  balance  on  his  stock  (§  20),  but  it  is  recover- 
able against  him  only  after  execution  against  the  corporation  has 
been  returned  unsatisfied.  § 51.  And  such  stockholder  has  a right 
of  action  against  the  corporation.  § 50.  This  liability  is  not  affected 
as  to  existing  debts  by  any  reduction  of  capital  stock.  § 28.  They 
are  also  liable  for  improper  reduction  or  distribution  of  capital  stock, 
to  the  amount  received  thereof  by  each  respectively.  § 28.  Stock- 
holders’ liabilities  may  be  extended,  if  so  desired,  by  certificate  of 
incorporation.  § 5. 

Meetings.  May  be  held  without  the  State  if  so  provided  by  the 
by-laws,  otherwise  the  meetings  of  the  stockholders  must  be  held 
at  the  principal  office  of  the  corporation  within  the  State.  § 32.  The 
place  of  holding  elections  must  not  be  changed  within  60  days  of  an 
election,  and  may  not  be  changed  at  any  time  except  with  notice  to 
each  stockholder  by  mail  at  least  20  days  before  the  election.  § 30. 

Notice.  Of  meetings  or  any  other  required  notice  may  be  waived 
in  writing,  signed  before  or  after  the  time  specified  therein.  § 138. 

Quorum.  Number  necessary  not  prescribed  by  statute.  Should 
be  fixed  by  the  by-laws. 

Voting.  Voting  at  elections  is  by  ballot  (§  30),  and  each  share 
has  one  vote  (Const.,  Art.  IX,  § 6),  unless  otherwise  provided  by 
charter  or  by-laws.  L.  1903,  Ch.  394,  § 17.  Voting  may  be  by  proxy, 
but  no  proxy  is  valid  after  three  years  from  its  date.  § 17.  No  share 
is  entitled  to  a vote  which  has  been  transferred  on  the  books  of  the 
company  within  twenty  days  next  preceding  an  election.  §§  17,  29. 
Trustees  may  vote  stock.  § 18.  Pledgee  may  vote  stock  only  when 
expressly  empowered  thereto  by  the  pledgor.  § 18.  Shares  belonging 
to  corporation  can  not  be  voted  directly  or  indirectly.  § 19.  Alpha- 
betical list  of  stockholders  entitled  to  vote  at  any  election  shall  be 
made  two  days  before  such  elections  and  shall  be  open  to  the  inspec- 
tion of  any  stockholder  (§  29),  but  the  stock  ledger  shall  decide  who 
is  entitled  to  vote  in  person  or  by  proxy  at  any  such  election.  The 
voting  power  and  other  rights  of  stockholders  may  be  conferred  upon 
bondholders  by  suitable  charter  provisions.  § 29.  (See  “Rights  and 
Powers”  preceding.) 

9.  Directors. 

General.  The  directors,  if  so  stated  in  the  charter  or  any  amend- 
ment thereto,  or  so  determined  by  vote  of  the  stockholders,  may  be 
divided  into  one,  two  or  three  classes,  the  term  of  the  first  class 
expiring  at  the  annual  meeting  next  ensuing;  of  the  second  class  one 
year  thereafter  and  the  third  class  two  years  thereafter,  each  class 
being  elected  on  the  expiration  of  these  prescribed  terms  for  its  full 
term.  § 9.  There  are  no  statutory  provisions  for  removal  of  directors. 

Number.  The  board  may  consist  of  any  number  not  less  than 
three.  § 9.  The  number  is  fixed  by  the  certificate  of  incorporation 
and  may  only  be  changed  by  amendment  thereof. 

Qualifications.  Each  director  must  own  at  least  three  shares  of 
stock  in  his  own  right,  and  at  least  one  director  must  be  a resident 
of  the  State.  § 9. 


DELAWARE. 


77 


Powers.  The  board  is  the  managing  body  of  the  corporation 
(§  9),  and  has  extensive  powers.  Hutchinson  v.  Co.,  104  Fed.  182. 
Additional  powers  may  be  delegated  the  board  as  desired,  save  as 
to  amendments  of  the  charter  and  ultimate  power  over  the  by-laws. 
Directors  hold  office  until  the  election  and  qualification  of  their 
respective  successors.  § 9.  They  have  power  to  fill  vacancies  on 
the  board.  §§  9,  30.  They  may  designate  two  or  more  of  their  mem- 
bers to  constitute  an  executive  committee.  § 9.  They  remain  trustees 
after  dissolution  or  expiration.  § 41. 

Liability.  For  failure  to  publish  certificate  of  reduction  of  capital 
stock,  directors  render  themselves  personally  liable  for  the  corporate 
debts  contracted  during  such  default.  § 28.  For  false  statements  of 
the  condition  or  business  of  the  corporation  they  are  jointly  and 
severally  liable  for  any  loss  or  damage  resulting  therefrom.  § 37. 
For  improper  payments  of  dividends  or  distribution  of  capital  stock, 
they  are  jointly  and  severally  liable  to  the  full  amount  of  such  pay- 
ment or  division.  § 35.  A director  absent  or  dissenting  from  any 
such  action  must  enter  and  publish  his  dissent  to  avoid  liability.  § 35. 
Directors  are  liable  for  loans  made  to  officers  of  the  corporation  or 
made  to  stockholders  upon  the  security  of  its  stock.  § 36.  Directors 
neglecting  or  failing  to  have  alphabetical  list  of  stockholders  pro- 
duced at  elections — as  required  by  § 29 — are  ineligible  to  any  office 
at  such  election.  § 29. 

Meetings.  May  be  held  without  the  State  if  the  by-laws  so  pro- 
vide. § 32.  No  statutory  requirements  as  to  notice.  Quorum  requires 
a majority  of  the  directors.  § 9. 

Executive  Committee.  The  directors  may  designate  two  or  more 
of  their  number  to  constitute  an  executive  committee,  which,  to  the 
extent  provided  in  the  creating  resolution  or  in  the  by-laws  of  the 
company,  shall  have  and  exercise  the  powers  of  the  board  in  the 
management  of  the  business  and  affairs  of  the  company.  § 9. 

10.  Officers. 

General.  The  prescribed  officers  are  a president,  who  must  be  a 
director,  a secretary  and  a treasurer.  These  two  latter  positions  may 
be  filled  by  the  same  person,  or  if  there  be  a. vice-president  he  may 
also  hold  the  office  of  secretary  or  treasurer,  but  not  the  three  offices 
together.  Officers  may  be  elected  by  the  directors  or  the  stock- 
holders as  the  by-laws  may  direct,  and  hold  office  until  their  suc- 
cessors are  chosen  and  qualified.  Vacancies  among  the  prescribed 
officers  shall  be  filled  in  the  manner  provided  for  in  the  by-laws,  or 
in  the  absence  of  by-law  provisions,  by  the  board  of  directors.  The 
treasurer  may  be  required  to  give  bond.  The  secretary  must  be 
sworn  to  the  faithful  discharge  of  his  duty,  and  shall  record  all  the 
proceedings  of  the  meetings  of  the  corporation  and  directors  in  a book 
to  be  kept  for  that  purpose.  § 10. 

Liability.  The  officers  are  jointly  and  severally  liable  on  neglect 
or  refusal,  thirty  days  after  written  demand  therefor,  to  file  certifi- 
cate of  capital  stock  issued  and  payments  on  same,  as  required  by 
§ 23,  this  liability  extending  to  all  debts  contracted  after  the  making 


78 


CLASSIFIED  CORPORATION  LAWS. 


of  such  payments  and  before  the  filing  of  such  certificate.  § 24.  For 
any  loan  to  an  officer  of  the  corporation,  or  for  any  loan  to  a stock- 
holder on  security  of  the  stock  of  the  company,  the  officer  or  officers 
who  make  it  or  assent  thereto  shall  be  jointly  and  severally  liable 
until  the  payment  of  the  sum  so  loaned  with  interest.  § 36.  Officers 
are  jointly  and  severally,  individually  liable  for  any  loss  or  damage 
resulting  from  written  statements  as  to  the  condition  or  business  of 
the  corporation  that  are  false  in  any  material  respect.  § 37. 

11.  Principal  Office. 

Every  corporation  must  maintain  a principal  office  or  place  of 
business  in  the  State  and  have  an  agent,  a resident  of  the  State,  in 
charge  thereof.  § 32.  The  name  of  the  corporation  must  be  con- 
spicuously displayed  on  its  principal  office  or  place  or  places  of  busi- 
ness. Failure  to  do  so  subjects  corporation  to  fine  of  from  $100  to 
$500.  § 33- 

Location  of  principal  office  within  the  State  may  be  changed  by 
resolution  of  the  board.  If  office  is  removed  from  the  city,  town  or 
county  where  first  located  to  some  other  point  in  the  State,  this 
resolution  must  be  duly  evidenced  and  filed  and  recorded  as  was  the 
certificate  of  incorporation.  § 137. 

12.  Corporate  Books. 

What  Required.  A stock  ledger  must  be  kept,  containing  the 
names  and  addresses  of  stockholders  and  the  number  of  shares  held 
by  each  and  shall  be  evidence  as  to  who  are  stockholders.  § 29. 
Minute  book  must  be  kept  in  which  shall  be  recorded  the  proceedings 
of  both  stockholders’  and  directors’  meetings.  § 10.  No  other  books 
required  by  statute. 

The  original  or  duplicate  stock  ledger  must  be  kept  at  the  prin- 
cipal office  or  place  of  business  of  the  company  in  the  State  and  is 
to  be  open  to  the  examination  of  every  stockholder  during  the  usual 
hours  of  business.  § 29. 

13.  Reports. 

On  or  before  January  1st  of  each  year  every  business  corporation 
shall  file  an  annual  report  with  the  Secretary  of  State,  showing  the 
location  of  its  principal  office  in  the  State,  the  names  of  its  officers, 
the  amount  of  its  authorized  capital,  the  amount  actually  paid  in,  the 
amount  invested  in  real  estate,  the  tax  annually  thereon  and  the 
amount  invested  in  manufacturing  or  mining  in  the  State,  or  both. 
Franchise  Tax  Law,  § 2.  Railroad,  telephone,  telegraph,  gas  and 
electric  and  other  companies  have  additional  statements. 

On  request  of  a creditor  or  stockholder,  the  president  and  secre- 
tary or  treasurer  must  file  in  office  of  the  Secretary  of  State  a cer- 
tificate stating  the  installments  on  stock  paid  in,  in  cash  or  by  pur- 
chase of  property,  and  also  the  total  amount  of  capital  stock  issued. 
§ 23.  For  failure  to  do  so  within  30  days  after  written  request,  they 
are  jointly  and  severally  liable  for  all  corporate  debts  contracted  after 
payments  and  until  such  filing.  § 24. 


DELAWARE. 


79 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  It  shall  not  be  lawful  for  any 
corporation  created  by  the  laws  of  any  other  state  or  of  the  United 
States,  to  do  any  business  in  the  State  until  it  shall  have  filed  in  the 
office  of  the  Secretary  of  State  a certified  copy  of  its  charter,  and  the 
name  or  names  of  its  authorized  agent  or  agents  in  the  State  on 
whom  process  may  be  served  (Const.,  Art.  IX,  § 5),  together  with  a 
sworn  statement  of  the  assets  and  liabilities  of  the  company,  and 
shall  have  paid  to  the  Secretary  of  State,  $50;  and  said  certificate 
shall  be  prima  facie  evidence  of  the  company’s  right  to  do  business  in 
the  State.  Upon  payment  of  the  usual  fee  for  certified  copies,  the 
Secretary  of  State  issues  certificate  of  such  filing  to  the  agent  or 
agents  of  the  corporation,  and  also  issues  a certificate  to  the  prothono- 
tary  of  the  Superior  Court  of  each  county  of  the  State,  such  certificate 
containing  the  name  of  the  agent  or  agents  of  the  corporation  and 
the  state  wherein  incorporated.  L.  1903,  Ch.  395,  §§  1-3.  Fees  to 
prothonotaries,  $1  each,  collected  for  their  account  by  Secretary  of 
State.  Banking  powers  are  prohibited.  L.  1903,  Ch.  395,  § 7. 

Foreign  insurance  companies  are  subject  to  the  provisions  of  the 
Laws  of  1901,  Ch.  99  and  the  Laws  of  1905,  Chs.  71-75. 

Penalties  for  Non-Compliance.  Non-compliance  is  made  a misde- 
meanor, and  upon  conviction  the  guilty  corporation  is  fined  $200  to 
$500  for  each  and  every  offence.  L.  1903,  Ch.  395,  § 6.  Any  agent  of 
a foreign  corporation  transacting  business  before  compliance  with 
act  may  be  fined  not  less  than  $100  .nor  more  than  $500  for  each 
offence.  Id. 

Taxation.  There  is  a retaliatory  tax  provision  in  § 9 of  the 
Franchise  Tax  Law,  by  which  any  foreign  corporation  doing  business 
in  Delaware  is  subjected  to  any  other  or  greater  taxes,  fines,  penalties, 
licenses,  fees  or  other  obligations  than  those  of  Delaware,  imposed 
by  its  home  state  on  foreign  corporations. 

Books,  Reports.  No  provisions. 

Attachments  Against.  Lies  on  ground  of  being  foreign  corpora- 
tions. 

15.  Combinations  and  Monopolies. 

No  provisions. 


DISTRICT  OF  COLUMBIA. 


1.  Corporation  Laws.* 

31  United  States  Statutes  at  Large  (1902),  Ch.  854  (p.  1189),  con- 
tains the  Code  of  The  District  of  Columbia,  and  Chapter  18  (p.  1280) 
of  this  Code  provides  for  corporations.  Subchapter  4 relates  to 
manufacturing,  agricultural,  mining,  mechanical,  insurance,  mercan- 
tile, transportation,  market  and  savings  bank  corporations,  and  Sub- 
chapters 13  and  14  affect  corporations  'generally.  The  remaining 
subchapters  provide  for  educational,  religious,  benevolent  insurance, 
building,  street  railway,  trust  and  loan,  etc.,  corporations.  Radical 
amendments  are  found  in  the  Act  of  Congress,  approved  February 
4th,  1905  (33  U.  S.  Stat.  at  L.,  p.  689),  providing  for  increased  organi- 
zation tax  and  imposing  stringent  regulations  as  to  subscriptions  to 
capital  stock  and  initial  payment. 

Under  Subchapter  4,  companies  may  be  formed  for  the  purpose 
of  carrying  on  any  enterprise  or  business  which  may  be  lawfully  con- 
ducted by  an  individual,  excepting  banks  of  circulation  or  discount, 
railroads  and  such  other  enterprises  as  are  specially  provided  for  by 
Subchapters  5-12.  § 605. 

2.  Taxes  and  Fees. 

Organization  Expenses.  Organization  tax  to  be  paid  to  Recorder 
of  Deeds  at  the  time  of  filing  the  certificate  of  incorporation:  40 

cents  on  each  thousand  dollars  of  the  amount  of  the  capital  stock 
as  set  forth  in  the  certificate;  minimum  fee,  $25.  33  U.  S.  Stat.  at  L., 
p.  689.  For  filing,  recording  and  indexing,  and  for  certified  copies, 
50  cents  for  first  200  words  or  less,  and  15  cents  for  each  additional 
100  words.  For  each  certificate  and  seal,  25  cents.  31  U.  S.  Stat.  at 
L.,  p.  1276. 

Franchise  Tax.  Business  corporations  which  receive  no  special 
franchise  or  privilege  are  exempt  from  franchise  tax,  and  are  to  be 
taxed  the  same  as  individuals.  Banks,  gas  and  electric  companies, 
street  railways,  hotel  companies,  building  associations,  guaranty  and 
fidelity  companies  are  taxed  at  various  rates.  32  U.  S.  Stat.  at  L.,  p. 
619,  amended  by  33  U.  S.  Stat.  at  L.,  p.  564. 

Local  Taxation.  As  for  individuals. 

General.  On  increase  of  capital  stock  same  fees  are  charged  as 
on  original  incorporation. 

* Sections  given,  unless  otherwise  noted,  are  of  Ch.  854,  31  U.  S.  Stat.  at  L. 
(1902). 


80 


DISTRICT  OF  COLUMBIA. 


8l 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more  persons.  § 605.  The  only 
statutory  restriction  is  that  not  more  than  fifty  per  cent,  of  the  stock 
may  be  owned  by  aliens.  § 397,  amended  by  32  U.  S.  Stat.  at  L., 
P-  530. 

Certificate  of  Incorporation.  Must  be  signed  and  acknowledged 
by  all  the  incorporators,  and  must  state  (§  606) : 

(1)  Name  of  company  and  object  for  which  it  is  formed. 
No  restrictions  as  to  name.  Name  may  not  be  changed  save 
by  re-incorporation  with  full  original  fees.  Only  one  specific 
business  or  enterprise  is  permitted  to  be  inserted. 

(2)  Term  of  existence,  which  may  be  perpetual. 

(3)  Amount  of  capital  stock  and  the  number  of  shares  of 
which  it  shall  consist. 

(4)  Number  of  trustees  who  shall  manage  the  concern  for 
the  first  year,  and  their  names.  These  trustees  must  be 
selected  from  the  incorporators.  § 608. 

(5)  Name  of  the  place  in  the  District  in  which  the  opera- 
tions are  to  be  carried  on. 

Filing  and  Recording.  This  certificate  is  filed  in  the  office  of  the 
Recorder  of  Deeds.  § 605.  This  officer  must  not  file  or  record  same 
until  it  is  proved  to  his  satisfaction  that  all  the  capital  stock  has  been 
subscribed  for  in  good  faith,  and  that  at  least  ten  per  cent,  thereof 
has  been  paid  for  in  cash  and  that  said  amount  is  in  the  possession 
of  the  first  board  of  trustees  named  in  the  certificate  of  incorporation. 
33  U.  S.  Statutes  at  Large,  p.  689.  A statement  to  this  effect  must 
be  sworn  to  by  the  incorporators  or  trustees,  and  a certificate  must 
be  made  by  the  proper  officer  of  some  reputable  banking  or  trust 
company  that  such  sum  is  in  cash  on  deposit  to  the  credit  of  the 
trustees,  this  statement  and  certificate  to  be  filed  with  the  Recorder 
of  Deeds.  Id. 

4.  Organization. 

First  Meetings.  The  first  meeting  of  incorporators  must  be  held 
within  the  District.  As  the  by-laws  may  be  adopted  and  officers 
elected  by  the  trustees  (§  612),  who  are  designated  by  the  certificate 
of  incorporation,  a preliminary  meeting  of  the  incorporators  is  not 
necessary.  § 607. 

As  a majority  of  the  trustees  must  be  residents,  their  meetings 
are  usually  necessarily  held  in  the  District.  At  the  first  meeting  by- 
laws are  adopted  and  officers  elected. 

By-Laws.  Are  adopted  by  the  trustees  (§  612)  with  the  usual 
provisions.  Walker  v.  Johnson,  17  App.  Cas.  D.  C.  144. 

Certificates.  None  required  to  show  completed  organization. 


82 


CLASSIFIED  CORPORATION  LAWS. 


5.  Corporate  Existence. 

When  Commenced.  On  filing  of  certificate  and  payment  of  fee. 
It  may  be  perpetual.  § 606. 

Beginning  Business.  May  not  be  commenced  until  ten  per  cent, 
of  the  capital  stock  has  been  actually  paid  in  (§  613)  in  cash,  nor 
until  the  full  amount  of  the  capital  stock  has  been  subscribed  in  good 
faith.  33  U.  S.  Stat.  at  L.,  p.  689. 

Renewal.  Is  not  provided  for,  the  Code  contemplating  perpetual 
existence. 

Forfeiture  of  Charter.  Not  provided  for  by  the  Code.  But  in- 
junction lies  on  application  of  District  Attorney  at  the  suit  of  the 
United  States  for  any  usurpation  of  power  or  violation  of  the  laws 
under  which  corporations  are  created.  § 793. 

Dissolution.  Is  provided  for  by  Subch.  14  of  the  Code;  in  case 
of  insolvency  or  otherwise,  by  petition  to  the  Supreme  Court  of  the 
District  of  a majority  of  the  trustees  or  one-third  of  the  stockholders. 
§ 768.  Where  there  are  no  unpaid  debts  the  corporation  may  also  be 
dissolved  if  so  decided  by  a majority  vote  of  the  stockholders  at  a 
meeting  held  in  pursuance  of  due  notice  published  in  some  newspaper 
of  general  circulation  (§  781),  in  which  case  the  last  trustees  remain 
in  charge  of  and  liquidate  the  corporation.  §§  769-797. 

6.  Corporate  Powers. 

General.  The  ordinary  powers  are  enumerated.  § 607. 

To  Hold  Property.  This  power  is  limited  to  such  property  as 
is  necessary  to  carry  on  the  operations  permitted  by  the  company’s 
charter.  § 607. 

Its  Own  Stock.  No  loan  of  money  shall  be  made  by 
any  company  on  the  security  in  whole  or  in  part  of  its  own  stock 
(§  621),  but  a company  may  forfeit  stock  on  non-payment  of  instal- 
ments. § 613. 

Stock  of  Other  Corporations.  It  is  not  lawful  for  a 
company  to  use  any  of  its  funds  in  the  purchase  of  stock  in  another 
corporation.  § 620. 

To  Borrow  Money.  Money  may  be  borrowed  on  mortgage  or 
lien  on  real  estate,  only  when  authorized  by  vote  of  the  stockholders. 
§ 607.  Debts  or  liabilities  must  not  at  any  time  exceed  the  amount 
of  the  capital  stock.  § 634. 

To  Do  Business  in  Other  States.  No  provisions. 

Consolidation  or  Merger.  Is  only  permitted  by  special  acts  of 
Congress.  Traction  Co.  v.  Offutt,  17  App.  Cas.  D.  C.  292,  306. 

Amendment  of  Charter.  Is  provided  for  only  to  increase  or 
diminish  stock  and  to  extend  or  change  the  corporate  business. 
§§  633-639.  Name  may  be  changed  oply  by  re-incorporation. 


DISTRICT  OF  COLUMBIA. 


83 


Change  of  capital  stock  or  change  of  business  may  be  effected 
by  a two-thirds  vote  of  the  stock  (§  639)  at  a meeting  called  by  no- 
tice, signed  by  a majority  of  the  trustees  and  specifying  the  object 
of  the  meeting,  such  notice  to  be  published  in  a newspaper  in  the 
District  of  Columbia  at  least  three  successive  weeks,  and  a copy  to  be 
mailed  to  each  stockholder  at  least  three  weeks  before  the  meeting. 
§ 635.  Two-thirds  of  all  the  stock  is  a quorum  for  such  meeting. 
§ 636. 

A certificate  of  the  proceedings  showing  compliance  with  the 
laws,  the  amount  of  capital  actually  paid  in,  the  whole  amount  of 
debts  and  liabilities  of  the  company,  and  the  amount  to  which  the 
capital  shall  be  increased  or  diminished,  or  the  business  to  which  it 
is  extended  or  changed,  is  made  out,  signed  and  verified  by  the  chair- 
man and  countersigned  by  the  secretary,  and  filed  with  the  Recorder 
of  Deeds  as  was  the  original  certificate.  §§  637,  638. 

7.  Capital  Stock. 

Amount.  No  limitations. 

Initial  Payment.  Ten  per  cent,  must  be  paid  in  cash  before  cer- 
tificate can  be  filed  (§  613);  and  the  full  amount  must  be  subscribed 
for  before  the  corporate  operations  may  begin.  33  U.  S.  Stat.  at  L., 
p.  689. 

Consideration  for  Issue.  Must  be  money  or  property  at  its 
actual  value.  § 613. 

Ten  per  cent,  must  be  paid  on  the  entire  capital  stock  at  the  time 
of  incorporation,  and  the  residue  may  be  called  for  by  the  trustees 
at  such  times  and  in  such  instalments  as  they  deem  proper,  and  the 
shares  are  forfeited  with  all  previous  payments,  if  payment  is  not 
made  within  sixty  days  after  demand,  or  after  notice  of  assessment 
has  been  published  for  six  successive  weeks  in  the  District.  § 613. 
Within  thirty  days  after  last  payment  has  been  made  upon  the  stock 
of  the  company,  the  president  and  a majority  of  the  trustees  must 
make  and  verify  a certificate  stating  the  amount  of  capital  fixed  and 
paid  in.  This  certificate  is  recorded  with  the  Recorder  of  Deeds  of 
the  District.  § 616. 

Increase  or  Decrease.  (See  under  § 6,  “Amendment  of  Charter.”) 
Before  stock  may  be  diminished  the  corporate  debts  and  liabilities 
must  be  satisfied  or  reduced  so  as  not  to  exceed  such  diminished 
capital.  § 634. 

Classes  of  Stock.  Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  No  special  provisions.  § 614. 

Transfer  of  Stock.  Is  to  be  provided  for  by  the  by-laws  (§  614), 
but  no  shares  shall  be  transferable  until  all  previous  calls  thereon 
shall  have  been  fully  paid  in  or  the  shares  shall  have  been  declared 
forfeited  for  non-payment.  §§  613,  614.  Transfers  must  be  entered 
on  the  stock  books.  §§  627,  629. 

8.  Stockholders. 

Rights  and  Powers.  The  stockholders  control  the  increase  and 


84 


CLASSIFIED  CORPORATION  LAWS. 


decrease  of  stock,  and  extension  and  change  of  business  by  two- 
thirds  vote  (§§  633-639);  also  dissolution.  § 781.  They  have  full 
right  to  examine  stock  book  during  usual  business  hours,  and  to 
make  extracts  therefrom.  § 628. 

Liability.  Stockholders  are  severally  and  individually  liable  to 
the  extent  of  the  unpaid  amount  on  the  stock  held  by  them  respect- 
ively. §§  615,  616. 

Meetings.  Stockholders’  meeting  must  be  held  within  the  Dis- 
trict. §§  606,  609.  Election  must  be  held  annually.  § 608. 

Notice.  Of  all  regular  meetings  for  election  of  trustees  must  be 
published  thirty  days  prior  thereto  in  a newspaper  in  the  District. 
§ 609. 

Quorum.  At  stockholders’  meetings  is  not  prescribed,  except 
for  meetings  to  increase  stock,  etc.,  where  two-thirds  of  the  out- 
standing stock  must  be  present  in  person  or  by  proxy.  § 636. 

Voting.  Must  be  by  ballot;  the  greatest  number  of  votes  elects. 
Each  share  has  one  vote.  § 609;  Walker  v.  Johnson,  17  App.  Cas. 
D.  C.  144. 

Proxies.  Voting  may  be  by  proxy.  §§  609,  636. 

9.  Trustees. 

Number.  The  board  must  consist  of  not  less  than  three  nor 
more  than  fifteen  members.  § 608.  No  provision  for  change  of 
number. 

Qualifications.  A majority  of  the  trustees  must  be  citizens  of 
the  District  and  all  must  be  stockholders.  § 608. 

Powers.  The  trustees  alone  make  the  by-laws.  § 612.  They 
alone  call  in  subscriptions  to  stock.  § 613.  They  may  fill  vacancies 
in  the  board  for  remainder  of  the  year.  § 609. 

Liability.  For  declaring  and  paying  any  dividend  which  would 
render  the  company  insolvent  or  diminish  the  capital  stock,  the 
trustees  are  jointly  and  severally  liable  for  all  the  corporate  debts 
then  existing  or  contracted  while  they  remain  in  office.  § 622. 
Trustees  objecting  to  such  dividend,  and  filing  a written  objection 
with  the  secretary  of  the  company  and  with  the  Recorder  of  Deeds 
of  the  District  before  payment  of  the  same,  are  exonerated.  § 623. 

Meetings.  Are  to  be  provided  for  by  by-laws,  the  statutes  being 
silent  on  the  subject. 

Executive  Committee.  No  specific  provision. 

10.  Officers. 

General.  A president  is  prescribed,  who  must  be  a trustee,  and 
such  subordinate  officers  with  such  duties  as  the  by-laws  may  provide. 
§§  61 1,  6t2.  These  officers  may  be  required  to  give  security.  § 61 1. 

All  officers  signing  any  false  certificate,  report  or  public  notice, 
knowing  the  same  to  be  false,  are  jointly  and  severally  liable  for 


DISTRICT  OF  COLUMBIA. 


85 


corporate  debts  and  contracts  while  they  are  stockholders  or  officers. 
§ 619.  If  any  loan  be  made  by  the  corporation  on  security  of  its  own 
stock,  the  officers  are  responsible  to  the  corporation  therefor.  § 621. 
For  failure  to  file  annual  report  they  are  liable  to  mandamus  pro- 
ceedings with  payment  of  costs,  expenses  and  counsel  fees.  § 618. 
For  neglect  to  make  proper  entry  in  stock  book,  or  refusal  to  exhibit 
same,  the  officers  are  deemed  guilty  of  a misdemeanor,  and  the  com- 
pany is  liable  to  fine  of  $50  for  every  offence,  and  for  all  damages 
resulting;  and  for  neglect  to  keep  such  stock  book  open  for  inspection 
the  company  forfeits  to  the  United  States  $50  for  each  day  such  neg- 
lect continues;  this  penalty  recoverable  by  suit  in  the  Supreme  Court 
of  the  District.  §§  631,  632. 

11.  Principal  Office. 

One  must  be  maintained  in  the  District,  the  location  of  which 
must  be  designated  in  the  certificate  of  incorporation.  § 606. 

12.  Corporate  Books. 

What  Required.  A stock  book  is  prescribed,  to  show,  alphabeti- 
cally arranged,  all  stockholders  for  six  years  past,  with  their  places 
of  residence,  number  of  shares  owned,  time  when  they  became 
owners  of  such  shares,  and  the  amount  actually  paid  thereon.  § 627. 

Where  Kept.  The  stock  book  must  be  kept  at  the  office  or 
principal  place  of  business  in  the  District.  § 628. 

Examination  of.  The  stock  book  must  be  open  during  the  usual 
business  hours  for  inspection  of  stockholders  and  creditors,  and  their 
personal  representatives,  who  have  the  right  to  make  extracts  there- 
from. § 628. 

13.  Reports. 

Every  company  must  annually  within  twenty  days  from  January 
1st,  make  a report,  which  shall  be  published  in  a newspaper  in  the 
District,  stating  the  amount  of  its  capital  and  the  proportion  actually 
paid  in  and  the  amount  of  existing  debts;  which  report  must  be  signed 
by  the  president  and  a majority  of  the  trustees,  be  verified  by  the 
oath  of  the  president  or  secretary  and  be  filed  with  the  Recorder 
of  Deeds.  § 617. 

Failure  to  file  such  report  renders  the  corporation  and  its  officers 
liable  to  mandamus  proceedings  by  creditors  or  any  interested  person, 
to  compel  such  filing,  with  payment  of  costs,  expenses  and  counsel 
fees.  § 618. 

14.  Foreign  Corporations. 

Provisions  exist  regulating  insurance,  banking,  building  and  loan 
and  certain  membership  corporations  doing  business  in  the  District 
(27  U.  S.  Stat.  at  L.,  325),  but  none  as  to  general  corporations.  In- 
junction lies  against  any  foreign  corporation  transacting  business  in 


86 


CLASSIFIED  CORPORATION  LAWS. 


(District  of  Columbia) 

the  District  without  complying  with  the  provisions  above  referred 
to,  or  transacting  in  the  District  any  business  not  allowed  by  its 
charter.  § 793.  Service  of  process  is  provided  for  on  any  agent  con- 
ducting its  business.  Id.,  § 1537.  Attachment  lies  against  them  on 
the  ground  of  being  a foreign  corporation.  § 445. 

15.  Combinations  and  Monopolies. 

Are  forbidden.  The  Sherman  Act  (26  U.  S.  Stat.  at  L.,  Ch.  647, 
p.  209)  applies  specially  to  District  of  Columbia. 


FLORIDA. 


i Corporation  Laws.* 

Constitution.  (1887.)  The  legislature  shall  provide  by  general 
laws  for  incorporating  educational,  agricultural,  mechanical,  mining 
and  other  useful  companies.  Art.  Ill,  § 25.  Public  aid  to  or  interest 
in  corporations  prohibited.  Art.  IX,  § 10.  By  amendment  of  1904, 
the  legislature  may  permit  municipalities  to  relieve  manufacturing 
enterprises  from  taxation  for  a period  not  to  exceed  fifteen  years. 
L.  1903,  p.  639. 

Statutes.  The  general  corporation  law  is  found  in  the  Revised 
Statutes  of  1892,  4th  Div.,  Title  III.  Important  amendments  are 
found  in  L.  1901,  Chs.  4895,  4896;  L.  1903-,  Ch.  5219.  §§  2119-2164  of 
the  Revised  Statutes  treat  of  business  corporations  generally,  while 
banks,  building  and  loan,  insurance,  surety,  railway,  canal  and  tele- 
graph companies  are  subject  to  the  provisions  of  §§  2165-230 6. 

Under  the  general  provisions,  corporations  may  be  formed  for 
the  transaction  of  any  lawful  business  of  a public  or  private  nature, 
including  all  works  of  internal  improvement.  § 2122. 


2.  Taxes  and  Fees. 

Organization  Expenses.  Charter  fee,  payable  to  Secretary  of 
State  for  State  Treasury,  $2  on  each  $1,000  of  capital  stock;  minimum 
fee,  $5;  maximum,  $250.  § 2125;  L.  1893,  p.  98. 

To  Secretary  of  State:  For  filing  charter,  etc.,  $1;  for  certificate 
and  seal,  $1;  for  copies  and  recording,  20  cents  for  the  first  100  words, 
and  10  cents  for  every  succeeding  100  words.  § 80.  Recording  fee  to 
Clerk  of  Circuit  Court,  25  cents  for  first  100  words  and  10  cents  for 
each  succeeding  100  words.  § 1394.  Expenses  incident  to  publication 
of  charter  are  also  incurred.  (See  “ Filing  and  Recording  ” under  § 3.) 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Shares  of  corporations  taxed  on  their  property 
in  the  State  are  not  taxed  against  the  shareholders.  L.  1895,  Ch. 
4322,  § 8. 

General.  On  increase  of  capital  stock,  same  fees  on  the  increase 
as  on  original  capitalization.  § 2125;  L.  1893,  p.  98.  Fees  for  publi- 
cation, filing  and  recording  of  amendments,  etc.,  are  practically  the 
same  as  on  original  incorporation. 

* Unless  otherwise  noted,  sections  given  are  of  Revised  Statutes  of  1892. 

87 


88 


CLASSIFIED  CORPORATION  LAWS. 


3.  Incorporation. 


Incorporators.  Must  be  three  or  more  persons.  § 2122.  No  re- 
quirements as  to  residence. 

Charter.  Must  be  signed  and  acknowledged  by  each  of  the 
incorporators  (§  2123,  amended  L.  1901,  Ch.  4895),  and  must  set 
forth  (Id.) : 

(1)  Name  of  the  corporation  and  place  or  places  of 
business.  No  two  corporations  shall  have  the  same  name. 
§ 2151. 

(2)  General  nature  of  the  business  or  businesses  to  be 
transacted. 

(3)  Amount  of  the  capital  stock  authorized,  number  and 
par  value  of  the  shares  into  which  it  is  divided,  and  terms 
and  conditions  on  which  it  is  to  be  paid  in. 

(4)  Term  for  which  the  corporation  is  to  exist.  May  be 
perpetual.  § 2121. 

(5)  By  what  officers  the  business  or  businesses  of  the 
company  is  to  be  conducted,  the  times  at  which  they  will 
be  elected,  and  the  names  of  the  officers  who  are  to  conduct 
the  business  or  businesses  until  those  elected  at  the  first  elec- 
tion shall  be  qualified. 

(6)  Highest  amount  of  corporate  indebtedness  or  liability 
which  may  be  incurred. 

(7)  Names  and  residences  of  the  subscribers,  and  the 
amount  of  stock  subscribed  for  by  each. 

Filing  and  Recording.  This  charter  is  filed  in  the  office  of  the 
Secretary  of  State,  and  is  also  published,  together  with  a notice  of 
intention  to  apply  for  so-called  letters  patent  thereon,  in  a newspaper 
in  the  county  in  which  the  place  of  business  will  be  located,  for  four 
successive  weeks,  once  each  week.  The  notice  of  intention  must  be 
signed  by  at  least  three  of  the  incorporators.  § 2124.  After  this 
publication  the  charter  is  presented  to  the  Governor  with  proof  of 
publication,  and,  after  due  examination  and  approval  of  the  same, 
the  original  charter  is  recorded  in  the  office  of  the  Secretary  of  State 
and  letters  patent  issued  to  the  corporation  from  the  same  office,  with 
certified  copy  of  the  charter  under  the  Great  Seal  attached.  These 
are  thereupon  recorded  in  the  office  of  the  Clerk  of  the  Circuit  Court 
of  the  county  wherein  the  principal  place  of  business  is  located. 
Duplicate  affidavits  by  the  treasurer,  that  ten  per  cent,  of  its  capital 
stock  has  been  subscribed  and  paid,  must  be  filed  with  the  Secretary 
of  State  and  with  the  Clerk.  §§  2124-21 27. 

4.  Organization. 

First  Meetings.  The  statutes  being  silent  on  the  subject,  the  first 
meeting  of  stockholders  must  be  held  within  the  State.  Duke  v. 
Taylor,  37  Fla.  64.  The  statutes  contain  no  requirements  as  to  these 
first  meetings.  The  first  officers  are  named  in  the  charter.  § 2123. 


FLORIDA. 


89 


By-Laws.  Are  to  be  adopted  at  the  first  annual  meeting,  or  at 
any  special  meeting  called  for  that  purpose  by  the  stockholders, 
unless  charter  provides  otherwise,  and  shall  prescribe  the  time  and 
place  of  meetings  of  the  corporation,  the  powers  and  duties  of  its 
officers,  and  may  contain  penalties  for  non-compliance,  not  exceeding 

$25.  § 2137. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  by  Secretary  of  State  of  letters 
patent  and  certified  copy  of  charter.  § 2125.  These  documents  are 
conclusive  evidence  of  corporate  existence  in  all  action  where  it  is 
only  collaterally  involved;  prima  facie  evidence  in  all  other  actions. 
§ 2126.  It  may  be  perpetual.  § 2121.  It  continues  three  years  after 
dissolution  to  settle  affairs.  § 2155;  Howe  v.  Robinson,  20  Fla.  352. 

Beginning  Business.  May  not  be  commenced  until  charter  fee 
has  been  paid,  letters  patent  and  certified  copy  of  charter  have  been 
recorded,  and  duplicate  affidavits  of  the  treasurer  showing  payment 
of  ten  per  cent,  of  the  capital  have  been  filed,  all  as  required  by  the 
law.  § 2127. 

Renewal.  No  specific  provision,  but  may  undoubtedly  be  effected 
by  charter  amendment. 

Forfeiture  of  Charter.  Diversion  by  a corporation  of  its  funds 
or  propertjr  to  objects  or  purposes  other  than  those  named  in  the 
charter,  or  the  payment  of  dividends,  leaving  insufficient  funds  to 
meet  outstanding  liabilities,  shall  work  a forfeiture  of  its  charter  and 
of  all  powers  and  privileges  conferred.  § 2162. 

Dissolution.  May  be  had  by  petition  of  a majority  of  the  stock- 
holders to  the  circuit  court.  § 2154.  The  president  and  directors 
remain  in  possession  of  assets  as  trustees.  But  a receiver  may  be 
appointed  for  cause  shown,  and  after  a forced  dissolution  a petition 
for  voluntary  dissolution  will  not  be  heard.  § 2157. 

6.  Corporate  Powers. 

General.  The  ordinary  powers  are  enumerated  and  on  these 
there  are  few  restrictions.  § 2121. 

To  Hold  Property.  This  is  permitted  to  the  extent  of  the  pur- 
poses of  the  corporation  and  such  as  may  be  taken  in  payment  of  or 
as  security  for  debts.  § 2121,  subdiv.  4. 

Its  Own  Stock.  Stock  of  Other  Corporations.  No 

provisions. 

To  Borrow  Money.  The  highest  indebtedness  to  which  the  cor- 
poration shall  at  any  time  subject  itself  is  to  be  stated  in  charter. 
§ 2123.  And  its  capital  stock  must  not  be  reduced  to  the  impairment 
of  its  ability  to  meet  its  outstanding  debts.  § 2149.  The  power  is 
broadened  and  defined  by  L.  1903,  Ch.  5219. 


qo 


CLASSIFIED  CORPORATION  LAWS. 


To  Do  Business  in  Other  States.  No  provisions. 

Consolidation  or  Merger.  Is  not  provided  for  business  corpora- 
tions. 

Amendment  of  Charter.  Resolution  therefor  must  be  adopted  by 
a vote  of  three-fourths  of  all  the  outstanding  stock,  at  a meeting  held 
for  that  purpose  on  notice  as  prescribed  for  meetings  to  increase 
capital  stock.  (See  “ Increase  or  Decrease,”  under  § 7.).  After  such 
adoption,  notice  of  intention  to  apply  to  the  Governor  therefor,  set- 
ting forth  the  desired  amendment,  is  published  once  each  week  for 
four  weeks,  having  on  file  in  the  meanwhile  in  the  office  of  the 
Secretary  of  State  a certificate  of  the  amendment  under  the  common 
seal.  This  certificate  with  proof  of  publication  of  notice  is  submitted 
to  the  Governor  for  his  approval,  whereupon  letters  patent  issue  re- 
citing the  amendment,  which  are  recorded  as  was  the  original  charter. 
§ 2150.  But  change  of  name  may  be  effected  by  resolution  adopted 
by  majority  vote  at  any  general  stockholders’  meeting,  certificate  of 
such  resolution  under  the  common  seal  to  be  filed  with  the  Secretary 
of  State,  whereupon  letters  patent  issue  reciting  the  change,  and  are 
recorded  as  in  the  case  of  other  amendments.  § 2151. 


7.  Capital  Stock. 

Amount.  No  limitations. 

Initial  Payment.  Ten  per  cent,  of  the  authorized  capital  stock. 
§§  2123,  2127,  as  amended  by  L.  1901,  Ch.  4895. 

Consideration  for  Issue.  Must  be  lawful  money  of  the  United 
States  unless  the  charter  states  that  all  or  part  may  be  paid  in 
property,  labor  or  services,  at  a just  valuation  to  be  fixed  by  the 
incorporators,  or  by  the  directors  at  a meeting  called  for  that  pur- 
pose. § 2128,  as  amended  by  L.  1901,  Ch.  4896.  The  terms  and  con- 
ditions on  which  the  capital  is  to  be  paid  in  are  to  be  prescribed  by 
charter.  § 2123.  The  directors  are  to  make  calls  according  to  the 
by-laws  or  charter,  and  may  forfeit  and  sell  stock.  § 2129. 

Increase  or  Decrease.  Increase  may  be  effected  by  a two-thirds 
vote  of  all  the  stockholders  at  a meeting  at  its  place  of  business 
called  on  notice,  stating  time,  place  and  object,  served  or  mailed 
regularly  and  published  once  a week  for  four  weeks  prior  to  such 
meeting  in  a newspaper  of  the  county.  Within  thirty  days  thereafter 
the  president  makes  return  to  the  Secretary  of  State  under  oath 
stating  the  amount  of  the  increase  and  the  terms  on  which  the  addi- 
tional stock  is  issued.  Then,  upon  payment  of  the  fees  for  such 
increased  stock  (See  § 2,  “Taxes  and  Fees”),  this  issue  is  authorized. 
Reduction  is  had  in  the  same  manner,  but  only  by  unanimous  vote 
of  the  stock,  and  on  certificate  of  State  Comptroller  endorsed,  that  in 
his  judgment  the  ability  of  the  corporation  to  meet  its  outstanding 
liabilities  or  indebtedness  is  not  impaired  thereby.  §§  2148,  2149. 

Classes  of  Stock.  No  provisions.  See  § 2123,  subdiv.  3. 

Par  Value  of  Shares.  Must  be  not  less  than  $10  per  share. 


FLORIDA. 


91 


§ 2128.  May  otherwise  be  changed  by  unanimous  vote  of  the  stock, 
in  the  same  manner  as  provided  for  increase  and  reduction  of  stock. 
§ 2149. 

Stock  Certificates.  No  statutory  requirements. 

Transfer  of  Stock.  Method  to  be  prescribed  by  the  by-laws,  but 
no  transfer  shall  be  made  until  all  previous  assessments  have  been 
paid.  § 2131. 

8.  Stockholders. 

Rights  and  Powers.  They  control  all  amendments  to  charter  not 
otherwise  specified  by  a three-fourths  vote  (§  2150);  increase  of  stock 
by  a two-thirds  vote  (§  2148);  reduction  of  stock  and  change  of  par 
value  of  shares  by  a unanimous  vote  (§  2149);  dissolution  by  a major- 
ity vote.  § 2154.  One-third  may  compel  meetings,  and  four-fifths 
of  the  stock  may  hold  meetings  on  waiver.  §§  2142-2144.  They  have 
the  right  of  examination  of  the  general  books  only  through  the 
medium  of  an  officer  or  committee  appointed  by  one-tenth  of  all  the 
subscribed  stock.  § 2147.  But  the  stock  register  must  be  at  all  times 
open  to  the  inspection  of  any  stockholder  on  written  application. 
§ 2133. 

Liability.  For  acting  as  a corporation  without  having  complied 
with  the  law  in  all  respects,  the  stockholders  are  held  as  partners. 
§ 2127.  They  are  liable  for  corporate  debts  to  the  extent  of  unpaid 
subscriptions  and  no  more,  and  execution  is  levied  on  their  property 
to  this  extent  after  execution  against  the  corporation  is  returned  un- 
satisfied. § 2152. 

Meetings.  Stockholders’  meetings  must  be  held  within  the  State. 
§ 2148.  Taylor  v.  Branham,  35  Fla.  297.  Elections  are  to  be  provided 
for  in  the  charter.  § 2123.  But  the  details  of  meetings  generally 
may  be  prescribed  by  the  by-laws.  §§  2137,  2141. 

Notice.  Must  always  be  published  in  a newspaper  in  the  county 
wherein  the  place  of  business  is  located  at  least  two  weeks,  once  a 
week;  and  served  personally  or  by  mail,  at  least  two  weeks  before 
the  meeting.  § 2141.  If  meetings  are  not  held,  a justice  of  the  peace, 
on  written  request  of  one-third  of  the  stock,  may  give  warrant  to  a 
stockholder  to  call  a meeting.  § 2142.  And  four-fifths  of  the  stock 
present  and  signing  written  consent  on  the  record  of  any  stock- 
holders’ meeting,  may  act,  and  their  acts  will  be  valid.  § 2144. 

Quorum.  Is  constituted  by  a majority  of  the  stock.  § 2145. 

Voting.  Each  share  has  one  vote,  but  no  stockholder  whose 
assessments  or  calls  are  past  due  shall  be  allowed  to  vote.  § 2146. 

Proxies.  Are  valid  if  in  writing.  § 2146. 

9.  Directors. 

Number.  Must  be  not  less  than  three  nor  more  than  thirteen. 
§ 2121.  Number  may  be  changed  by  such  vote  of  the  stockholders 
as  the  by-laws  may  direct  at  a meeting  called  for  that  purpose. 
§§  2121,  2138. 


92 


CLASSIFIED  CORPORATION  LAWS. 


Qualifications.  Directors  must  be  stockholders,  qualified  to  vote. 

§ 2138.  v 

Powers.  They  fill  vacancies  on  the  board  until  next  election. 
§ 2139.  Their  powers  are  to  be  regulated  by  the  by-laws.  § 2137. 
They  remain  trustees  on  dissolution.  § 2157.  They  are  given  powers 
to  control  mortgages  or  deeds  of  trust.  L.  1903,  Ch.  5219. 

Liability.  For  knowingly  declaring  any  dividend  when  the  cor- 
poration is  insolvent,  or  which  renders  it  insolvent,  the  directors  are 
jointly  and  severally  liable  for  the  debts  of  the  corporation  to  the 
extent  of  such  dividends.  An  absent  or  dissenting  director  is  ex- 
empt. § 2163. 

Meetings.  May  be  entirely  controlled  by  the  by-laws.  §§  2137, 
2141.  A quorum  is  a majority  of  the  whole  number.  § 2138. 

Executive  Committee.  May  undoubtedly  be  provided  for  by  the 
charter  or  by-laws.  §§  2123,  2137,  2138;  Land  Co.  v.  Mitchell,  4 
Fla.  192. 


10.  Officers. 

The  officers  and  the  times  of  their  election  are  to  be  prescribed 
in  the  charter.  § 2123.  Their  powers  and  duties  are  to  be  prescribed 
by  the  by-laws.  § 2137.  The  president  must  be  a director  and  may 
be  chosen  by  the  stockholders.  § 2138.  The  secretary  or  other  custo- 
dian of  the  corporate  books  must  keep  them  in  his  possession  and 
read}^  to  be  exhibited  on  demand.  § 2147.  The  treasurer  is  to  keep 
list  of  stockholders.  § 2133. 

Liability.  Any  officer  neglecting  or  refusing  to  make  annual 

return  to  State  Comptroller  (See  § 13,  “Reports”)  forfeits  not  less 
than  $100  to  be  recovered  by  the  State.  § 2134.  Penalty  for  refusing 
to  furnish  information  to  officer  holding  execution  is  a fine  not  ex- 
ceeding $500.  § 2153.  For  false  entries,  etc.,  there  is  heavy  punish- 

ment in  imprisonment  and  fines.  §§  2467-2470.  Treasurer  forfeits 
$50  for  refusing  to  exhibit  list  of  stockholders.  § 2133. 

11.  Principal  Office. 

Is  to  be  kept  within  the  State.  § 1001;  L.  1903,  Ch.  5221;  Taylor 
v.  Branham,  35  Fla.  297. 

12.  Corporate  Books. 

What  Required.  The  treasurer  or  cashier  is  to  keep  list  of 

stockholders,  to  contain  names  and  number  of  shares  owned.  § 2133. 
Other  books  and  records  are  referred  to  but  not  specifically  pre- 
scribed. § 2147. 

Where  Kept.  In  the  possession  of  the  secretary  or  other  officer 
made  custodian  thereof  by  the  by-laws.  § 2147. 


FLORIDA. 


93 


Examination  of.  The  list  of  stockholders  is  at  all  times  open  to 
inspection  of  stockholders  on  written  application.  § 2133.  And  the 
other  books,  records  and  papers  of  the  corporation  must  be  exhibited 
during  business  hours  on  demand,  to  any  officer,  director  or  com- 
mittee appointed  by  one-tenth  of  the  subscribed  stock,  and  extracts 
must  be  furnished.  They  must  also  be  produced  in  evidence  on  sub- 
poena (§  2147),  and  information  must  be  furnished  to  officers  holding 
execution  against  corporation  and  stockholders.  § 2153. 

13.  Reports. 

The  treasurer  or  cashier,  or  other  officers,  must  annually  make  a 
return  to  the  State  Comptroller  showing  name  and  residence  of  each 
stockholder,  with  his  number  of  shares,  and  the  par  and  cash  market 
value  of  such  shares,  and  also  the  whole  amount  of  the  capital  stock, 
the  amount  actually  paid  in,  and  the  real  estate  subject  to  taxation 
and  the  personal  estate.  § 2134.  Fine  of  $100  is  prescribed  for  failure 
to  file  such  return.  Semi-annual  statements  of  the  amount  of  capital 
stock  subscribed,  amount  actually  paid  in,  and  amount  of  the  cor- 
porate indebtedness,  are  filed  in  the  State  Comptroller’s  office,  or 
oftener  whenever  the  Comptroller  shall  direct.  § 2136. 

Publication  is  required  by  law  of  all  notices  of  stockholders’ 
meetings,  and  of  original  charter  and  all  amendments  thereto. 
§§  2124,  2141,  2150. 

14.  Foreign  Corporations. 

Admission  of  foreign  business  corporations  is  not  specially  pro- 
vided for  by  law.  Railroad,  insurance,  surety  and  Lloyd  companies 
may  file  certified  copies  of  their  charters  and  pay  license  fees.  L. 
1897,  Ch.  4615;  L.  1895,  Ch.  4380,  etc.;  Taylor  v.  Branham,  35  Fla. 
297;  Duke  v.  Taylor,  37  Fla.  64;  Hocker  v.  Ga.,  34  So.  901. 

15.  Combinations  and  Monopolies. 

Combinations  to  monopolize  or  control  sale  of  beef  or  other 
fresh  meat  in  the  State  are  prohibited,  on  penalty  of  forfeiture  of 
charter  or  right  to  do  business  in  the  State,  and  fine  not  exceeding 
$5,000  and  imprisonment  not  exceeding  one  year  for  individuals. 
Suits  may  be  brought  by  private  individuals  to  enforce  the  law  by 
injunction.  L.  1897,  Ch.  4534. 


GEORGIA. 


1.  Corporation  Laws.* 

Constitution.  (1877.)  The  General  Assembly  is  prohibited  from 
granting  corporate  powers  to  private  companies  except  in  the  case 
of  banking,  insurance,  railroad,  canal,  navigation,  express  and  tele- 
graph companies,  and  shall  prescribe  the  manner  in  which  the  courts 
shall  grant  such  powers.  Art.  Ill,  Sec.  VII.  The  General  Assembly 
may  not  authorize  any  corporation  to  buy  stock  of  any  other  cor- 
poration or  to  make  any  contract  with  another  corporation  tending 
to  defeat  or  lessen  competition  or  encourage  monopoly.  Art.  IV, 
Sec.  II,  § 4.  State  interest  in  any  corporation  prohibited.  Art. 
VII,  Sec.  II,  § 5- 

Statutes.  Civil  Code  of  Georgia  (Revision  of  1895),  Second 
Title,  §§  1831-1902,  contains  the  general  corporation  law.  Sundry 
provisions  relating  to  general  corporations  are  also  found  in  Civil 
Code,  §§  2349,  2350,  2698,  3064,  3954,  and  Political  Code,  §§  805-881. 
A supplement  brings  these  Codes  down  to  1901  and  further  amend- 
ments are  found  in  the  Session  Laws  of  1902  and  1905. 

Under  the  general  law  corporations  may  be  formed  for  any  law- 
ful purpose  except  in  the  case  of  banks,  railroad,  telegraph,  insurance, 
navigation,  express  and  canal  corporations,  charters  for  which  are 
granted  and  issued  by  the  Secretary  of  State.  §§  1903-2348. 

2.  Taxes  and  Fees. 

Organization  Expenses.  No  license  fees  are  imposed  on  ordinary 
business  corporations,  but  fees  must  be  paid  to  Clerk  of  Court  on 
filing  of  papers,  not  usually  amounting  to  more  than  $15.  Also  peti- 
tion for  charter  must  be  published,  the  cost  of  such  publication  vary- 
ing according  to  length  and  local  conditions.  Cost  of  certified  copy 
of  charter,  $2.50. 

Franchise  Tax.  An  annual  license  or  occupation  tax  is  paid  to 
the  tax  collector  of  the  county  in  which  business  is  carried  on,  on 
capital  not  exceeding  $25,000,  $5;  over  $25,000  and  not  over  $100,000, 
$10;  over  $100,000  and  not  over  $300,000,  $25;  over  $300,000  and  not 
over  $500,000,  $50;  over  $500,000  and  not  over  $1,000,000,  $75;  and 
over  $1,000,000,  $100.  L.  1905,  p.  34. 

Local  Taxation.  Of  property  as  for  individuals.  Returns  are 
made  by  July  1st  of  each  year,  as  of  April  1st.  Tax  payable'  October 

* Unless  otherwise  noted,  references  are  to  the  Civil  Code,  1895,  and  Supple- 
ment, 1901. 


94 


GEORGIA. 

Enactments  of  1906. 


13.  Reports. 

An  Annual  Return  must  be  made  to  Corporation  Commissioner 
of  State  by  all  domestic  corporations  (except  banks)  and  by  all  foreign 
corporations  doing  business  in  the  state,  on  or  by  November  1st  of 
each  year.  Return  must  be  made  through  president  or  general  mana- 
ger of  corporation,  and  set  forth: — 

(1)  Name  of  Corporation. 

(2)  When  Incorporated. 

(3)  By  What  Authority  Incorporated. 

(4)  Where  Incorporated. 

(5)  Amount  of  Capital  Stock. 

(6)  The  Business  of  Corporation. 

(7)  Location  of  Principal  Office.  L.  1906,  Act  447,  § 2,  p.  105. 

A filing  fee  shall  be  paid  of  $1  the  first  year  and  fifty  cents  each 
succeeding  year.  L.  1906,  Act  447,  § 3,  p.  105. 

Any  corporation  failing  to  make  annual  return  as  required  is 
liable  to  a penalty  of  $50.  L.  1906,  Act  447,  § 4,  p.  106. 

The  Secretary  of  State  is  made,  ex-officio,  Corporation  Commis- 
sioner of  State.  L.  1906,  Act  447,  § 1,  p.  105. 


/ 


GEORGIA. 


95 


ist.  Pol.  Code,  § 827.  Penalty  for  default  in  making  returns  or  in  pay- 
ment of  taxes  is  forfeiture  of  charter  (Id.,  § 875)  and  trebling  the 
tax.  Id.,  § 876. 

General.  To  Secretary  of  State:  For  recording  statement  of 

issuance  of  bonds,  20  cents  per  100  words;  same  for  transcripts;  for 
noting  cancellation  of  bonds,  $1  per  bond.  §§  1866-1869,  675 7-  On 
all  amendments  or  renewal  of  charter  the  expenses  are  practically 
the  same  as  on  original  incorporation. 

3.  Incorporation. 

Incorporators.  Number  for  business  corporation  is  not  specified, 
but  must  be  more  than  one.  § 2350.  No  requirements  as  to  residence. 
The  incorporators  have  a property  right  in  the  franchise  of  which 
they  can  be  deprived  only  by  due  process  of  law.  § 1854.  They  are 
held  liable  for  subscriptions  to  minimum  capital  stock  in  case  of  any 
default  therein.  § 1856. 

Declaration  of  Incorporation.  Must  be  prepared  by  the  incor- 
porators. Manner  of  execution  not  prescribed.  This  declaration  must 
set  forth  (§  2350): 

(1)  Objects  of  their  association  and  the  particular  business 
they  propose  to  carry  on. 

(2)  Corporate  name.  Must  be  different  from  that  of  any 
other  corporation  of  the  State.  Lane  v.  Society,  120  Ga. 
355  (1904). 

(3)  Amount  of  capital  to  be  employed  by  them  and  actu- 
ally paid  in. 

(4)  Place  of  doing  business. 

(5)  The  time,  not  exceeding  twenty  years,  for  which  they 
desire  to  be  incorporated. 

Corporations  chartered  by  General  Assembly  expire  in  thirty 
years,  if  no  period  is  specified  by  charter.  § 1851. 

Filing  and  Recording.  This  declaration  is  in  the  form  of  a 
petition  to  the  Superior  Court  of  the  county  in  which  the  incorpora- 
tors desire  to  transact  business,  and  is  filed  in  the  office  of  the  Clerk 
of  that  Court.  It  is  also  published  once  a week  for  four  weeks  in 
the  nearest  public  gazette  to  the  point  where  such  business  is  located, 
whereupon  the  court  passes  an  order  granting  the  application.  The 
petition  and  order  are  then  recorded  by  the  Clerk  in  a book  known  as 
the  “ Record  of  Superior  Court  Charters  ” and  on  the  minutes  of  the 
court.  § 2350,  subdivs.  1 and  2. 

4.  Organization. 

First  Meetings.  No  statutory  provisions,  but  meetings  of  stock- 
holders must  be  held  within  the  State.  Mining  Co.  v.  King,  45  Ga. 
34  (1872).  The  first  stockholders’  meeting  is  usually  held  as  soon  as 
charter  is  granted  and  at  that  meeting  by-laws  are  adopted  and  direc- 
tors elected.  These  directors  then  meet  and  elect  officers. 


96 


CLASSIFIED  CORPORATION  LAWS. 


By-Laws.  By-laws  may  be  passed  not  inconsistent  with  law. 

§ 1852. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  granting  of  order  by  Superior  Court, 
and  continues  for  twenty  years,  with  privilege  of  renewal  for  a like 
period.  § 2350,  subdiv.  2.  It  can  not  be  collaterally  attacked.  § 1862. 

Beginning  Business.  Ten  per  cent,  of  the  capital  stock  must  be 
paid  in  before  business  may  be  commenced  (§  2350,  subdiv.  3),  al- 
though the  corporation  may  organize  and  collect  subscriptions  at 
once.  McCandless  v.  Co.,  115  Ga.  968  (1902). 

Renewal.  May  be  had  for  a period  of  twenty  years,  on  applica- 
tion to  Superior  Court  which  may  be  made  prior  to  expiration,  the 
petition  to  set  forth  the  corporate  name,  the  date  and  manner  of 
original  incorporation,  all  subsequent  amendments,  and  any  new 
amendments  desired.  The  application  must  be  accompanied  by  an 
abstract  from  the  minutes  of  the  corporation  showing  that  it  has 
been  authorized  by  proper  corporate  action.  The  renewal  takes 
effect  on  expiration  of  the  original  period.  §§  6170,  2350,  subdiv.  7. 

Forfeiture  of  Charter.  May  occur  on  failure  to  commence  busi- 
ness for  two  years  after  granting  of  charter  (§  2350,  subdiv.  3);  for 
wilful  violation  of  any  essential  condition  on  which  the  charter  was 
granted,  for  misuser  or  non-user  of  franchises  (§  1883) ; for  violation 
of  laws  against  combinations  (§  6468),  or  for  non-payment  of  taxes 
and  failure  to  make  returns.  Pol.  Code,  § 875.  Forfeiture,  however, 
takes  effect  only  on  judgment  of  court  of  competent  jurisdiction. 
§ 1883;  Trust  Co.  v.  State,  109  Ga.  736  (1899). 

Dissolution.  Follows  expiration  of  charter  period,  forfeiture  of 
charter,  surrender  of  franchises  or  death  of  all  the  members  without 
provision  for  succession.  §§  1882,  1884.  On  dissolution  for  any 
cause,  the  Superior  Court  has  jurisdiction  to  appoint  receiver  to 
administer  assets.  §§  1853,  1886. 

6.  Corporate  Powers. 

General.  The  usual  common  law  powers  are  enumerated.  § 1852. 

To  Hold  Property.  This  power  is  granted  only  as  to  such  cor- 
porate property  as  is  necessary  to  the  purpose  of  organization. 
§§  1852,  2350,  subdiv.  5- 

Its  Own  Stock.  Not  regulated  by  statute. 

Stock  of  Other  Corporations.  This  is  expressly  pro- 
hibited by  the  Constitution,  Art.  IV,  Sec.  II,  § 4. 

To  Borrow  Money.  No  statutory  restrictions.  A certified  state- 
ment of  bonds  for  circulation  issued  or  endorsed  by  a corporation, 
must  be  furnished  to  the  Secretary  of  State,  showing  the  letter,  date 
of  issue,  number  of  bonds,  amount  of  issue,  rate  of  interest,  when 


GEORGIA. 


97 


and  where  payable  and  the  date  of  the  law,  if  any,  authorizing  such 
issue.  On  payment,  the  cancelled  bonds  are  exhibited  to  the  Secre- 
tary of  State,  who  notes  payment  thereof  on  the  record.  (For  fees 
to  Secretary  of  State  in  connection  with  bond  issues,  see  “ General  ” 
under  “Taxes  and  Fees,”  § 2.)  §§  1866,  6157.  Penalty  for  non-com- 

pliance is  fine  not  exceeding  $500  for  each  offence.  §§  1867-8. 

To  Do  Business  in  Other  States.  No  statutory  provision.  Min- 
ing Co.  v.  King,  45  Ga.  34  (1872). 

Consolidation  or  Merger.  Of  general  corporations  is  not  pro- 
vided for  by  law,  and  is  prohibited  when  the  effect  would  be  to  defeat 
or  lessen  competition  or  to  encourage  monopoly.  §§  6467-6472. 
Const.,  Art.  IV,  Sec.  II,  § 4. 

Amendment  of  Charter.  May  be  obtained  by  petition  and  pro- 
ceedings as  in  case  of  original  charter.  § 2350,  subdiv.  6.  Amend- 
ments may  be  inserted  on  renewal  of  charter.  §§  6170,  2350,  sub- 
div. 7. 

7.  Capital  Stock. 

Amount.  No  limitations. 

Initial  Payment.  Ten  per  cent,  of  authorized  capital  must  be 
paid  in  before  corporation  can  commence  business,  and  within  two 
years  after  granting  of  charter.  § 2350,  subdiv.  3. 

Consideration  for  Issue.  No  statutory  provisions.  Payment  of 
subscriptions  by  property  is  allowed  if  such  property  is  the  full  equiv- 
alent of  a cash  payment.  Burden  of  proof  is  on  party  alleging  that 
stock  issued  for  property  is  not  fully  paid.  Hayden  v.  Cotton  Fac- 
tory, 61  Ga.  233  (1878);  Allen  v.  Grant,  122  Ga.  552  (1905). 

Charter  may  prescribe  manner  of  making  calls  or  assessments  on 
stock.  Wilson  v.  R.  R.  Co.,  33  Ga.  466.  The  liability  of  a stock- 
holder for  unpaid  subscriptions  on  his  stock  is  an  asset  of  the  cor- 
poration. § 1890.  By-laws  may  provide  that  debts  due  to  the 
corporation  from  stockholders  constitute  a lien  on  their  stock.  Lien 
is  binding  on  creditors  and  purchasers  with  notice.  § 2825;  Owens  v. 
Trust  Co.,  122  Ga.  521  (1905). 

Classes  of  Stock.  Not  provided  for  by  the  statutes,  but  are  recog- 
nized. Totten  v.  Tison,  54  Ga.  139. 

Par  Value  of  Shares.  No  limitations. 

Stock  Certificates.  No  provisions  in  statutes.  Certificates  need 
not  be  delivered  until  subscriptions  are  fully  paid.  Ross  v.  R.  R.  Co., 
53  Ga.  514- 

Transfer  of  Stock.  Except  as  against  the  claims  of  the  corpora- 
tion a transfer  of  stock  does  not  require  a transfer  on  the  books  of 
the  company.  § 1855;  R.  R.  Co.  v.  Thomason,  40  Ga.  408  (1869). 
Transfer  of  stock  within  six  months  prior  to  insolvency  of  corporation 
does  not  relieve  transferee  from  liability  on  unpaid  stock.  Code, 
§ 1888. 


98 


CLASSIFIED  CORPORATION  LAWS. 


8.  Stockholders. 

Rights  and  Powers.  No  special  rights  or  powers  are  given  the 
stockholders  by  statute.  All  rights  and  remedies  are  enforced  through 
the  medium  of  the  courts,  and  equity  rules  prevail.  §§  1859,  1861; 
Bethune  v.  Wells,  94  Ga.  486  (1894). 

Liability.  Stockholders  are  liable  for  the  corporate  debts  to 
tlie  extent  of  unpaid  subscriptions  for  stock.  § 2350,  subdiv.  3.  This 
liability  is  not  affected  by  the  dissolution  of  the  corporation  (§  1887), 
nor  can  it  be  avoided  by  transfer  of  stock  within  six  months  prior 
to  insolvency.  §§  1888,  1889.  Proceedings  in  actions  to  enforce  stock- 
holders’ liability  are  given  in  §§  1892-1898,  1893,  providing  for  notice 
of  such  action  to  the  stockholders  by  publication.  Allen  v.  Grant, 
122  Ga.  552  (1905);  Comm.  Bank  v.  Warthen,  119  Ga.  990  (1904). 

Meetings.  Must  be  held  within  the  State.  Mining  Co.  v.  King, 
45  Ga.  34  (1872). 

Notice,  Quorum  and  Voting.  No  statutory  provisions.  Should 
be  provided  for  by  by-laws.  Voting  by  proxy  is  allowable  if  provided 
for  in  charter  or  by-laws. 


9.  Directors. 

Number.  No  restrictions.  May  be  fixed  by  charter  or  by-laws. 
Mining  Co.  v.  King,  45  Ga.  34  (1872). 

Qualifications.  No  requirements. 

Powers.  The  directors  represent  the  corporation  and  its  stock- 
holders. They  remain  trustees  on  insolvency.  § 1858. 

Liability.  For  declaring  any  dividends  or  distributing  any  money 
among  members  as  profits  when  such  are  not  the  actual  legitimate 
net  earnings,  directors  are  guilty  of  a misdemeanor.  Pen.  Code,  § 691; 
L.  1902,  Ch.  131,  p.  58. 

Meetings.  No  provisions  for  place,  notice  or  quorum.  Should 
be  regulated  by  by-laws. 

Executive  Committee.  No  provisions. 


10.  Officers. 

! 

Corporations  act  through  their  officers  and  are  responsible  for 
their  acts.  § 1861.  For  failure  to  allow  inspection  of  list  of  stock- 
holders (§  1891),  officers  are  guilty  of  misdemeanor.  Penal  Code, 
§ 594.  Also  for  illegal  dividends.  Id.,  § 691.  For  refusing  to  give 
certificate  of  stockholders  and  their  holdings  on  application  by  plain- 
tiff in  a suit  against  the  corporation,  the  officer  refusing  becomes 
liable  for  principal,  interests  and  costs  in  the  suit.  § 1895. 


GEORGIA. 


99 


11.  Principal  Office. 

One  must  be  maintained  in  the  State  and  must  be  named  in  the 
petition  for  incorporation.  § 2350.  It  can  be  changed  only  by  amend- 
ment of  charter.  R.  R.  Co.  v.  Wilson,  116  Ga.  189  (1903)1  Etowah 
M.  Co.  v.  Crenshaw,  Id.  406. 

12.  Corporate  Books. 

A list  of  the  stockholders  must  be  kept  and  must  be  open  to  the 
inspection  of  creditors  of  the  corporation  during  business  hours 
(§  1891),  and  such  lists,  showing  the  number  of  shares  owned  by  each, 
must  be  produced  by  the  president  or  other  officer  on  demand  of  any 
creditor.  §§  1890,  1895. 

13.  Reports. 

No  reports  other  than  tax  returns  are  required.  L.  1905,  pp.  37-8. 
Petitions  for  incorporation  and  for  amendments  must  be  published. 
No  other  publications  are  required  by  statute. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  formalities  required.  For- 
eign corporations  are  recognized  and  admitted  as  a matter  of  comity, 
but  only  to  such  extent  as  Georgia  corporations  are  recognized  in 
the  home  state  of  such  foreign  corporations.  § 1846.  They  can  not 
exercise  any  corporate  powers  or  privileges  within  the  State  which 
are  prohibited  to  domestic  corporations.  § 1847;  see  also  § 1850. 
Foreign  corporations  are  prohibited  from  owning  land  in  Georgia 
to  the  extent  of  5,000  acres  without  incorporating  under  Georgia 
laws,  excepting  companies  loaning  money  on  real  estate  securities, 
or  taking  the  same  in  payment  of  debts.  § 1849;  Reeves  v.  So.  R. 
Co.,  121  Ga.  561  (1905). 

If  foreign  corporations  pay  their  franchise  tax  same  as  required 
of  domestic  corporations,  before  April  1st  of  each  year,  their  agents 
are  not  required  to  pay  license  fees  ($5  to  $75  based  on  capitaliza- 
tion). Any  corporation  desiring  to  take  advantage  of  this  provision 
must  before  April  1st  register  its  name,  capital  stock  and  names  of 
agents  with  the  Comptroller  General.  L.  1905,  p.  34. 

Penalties  for  Non-Compliance.  Action  by  any  party  in  interest 
or  by  the  Attorney  General  at  the  direction  of  the  Governor,  to 
restrain  the  exercise  of  any  improper  or  prohibited  powers  or  privi- 
leges, and  to  declare  the  same  invalid.  § 1848. 

Taxation.  Same  as  of  domestic  corporations.  L.  1905,  p.  34.  For 
failure  to  make  returns  or  pay  taxes,  the  right  to  do  business  in  the 
State  is  suspended.  Pol.  Code,  § 875. 

Books  and  Reports.  Are  by  implication  the  same  as  those  re- 
quired of  domestic  corporations,  being  merely  lists  of  stockholders 
and  tax  returns.  Franchise  tax  returns  are  required.  L.  1905,  p.  34. 


100 


CLASSIFIED  CORPORATION  LAWS. 


(Georgia) 

Attachments  Against.  Lie  against  foreign  corporations  as  against 
non-residents.  Code  Prac.,  § 4527. 

25.  Combinations  and  Monopolies. 

The  General  Assembly  shall  have  no  power  to  authorize  any 
corporation  to  buy  stock  of  or  make  any  contract  with  any  other 
corporation,  foreign  or  domestic,  which  may  have  the  effect  to  defeat 
or  lessen  competition  or  encourage  monopoly,  and  L.  1896,  p.  68, 
carries  this  provision  into  effect  (§§  6467-6472;  Const.,  Art.  IV,  Sec. 
II,  § 4),  with  penalties  of  forfeiture  of  charter  or  right  to  do  busi- 
ness (§6468),  of  fines  of  $100  to  $5,000  and  imprisonment  one  to  ten 
years.  Also  damages  to  person  injured.  §§  6470,  6471;  Willis  v.  Co., 
120  Ga.  597  (1904). 


HAWAII. 


1.  Corporation  Laws.* 

Organic  Law.  Is  contained  in  Act  of  Congress  of  the  United 
States,  April  30,  1900  (31  U.  S.  Stat.  at  L.,  Ch.  339,  p.  141).  The 
granting  of  charters  by  special  act  of  legislature  is  forbidden,  and 
corporations  are  prohibited  from  acquiring  more  than  1,000  acres 
of  land. 

Statutes.  The  corporation  law  of  Hawaii  is  found  in  the  Revised 
Laws  of  Hawaii,  1905,  Title  XXII,  §§  2535-2629,  of  which  Chapter  158, 
§§  2570-2598,  relates  to  banking;  Chapter  159  to  insurance  corpora- 
tions. Of  Chapter  157,  §§  2536-2541  provide  for  organization  of  joint 
stock  companies,  which  are  in  effect  the  same  as  corporations,  and 
§§  2542-2543  for  incorporation  by  charter.  The  provisions  of  the 
chapter  are,  however,  generally  applicable  to  both.  § 2541.  Chapter 
160,  §§  2623-2629,  provides  for  foreign  corporations. 

Joint  stock  companies  may  be  incorporated  under  the  general 
law  for  the  purpose  of  carrying  on  any  business  or  undertaking, 
mercantile,  agricultural  or  manufacturing,  and  for  dealing  in  real 
estate,  building,  or  any  other  business  for  which  individuals  may 
lawfully  associate  themselves,  with  the  exception  of  banking  and 
professional  businesses.  § 2535. 

2.  Taxes  and  Fees. 

Organization  Expenses.  A stamp  tax  of  $25  must  be  paid  on 
charter  or  articles  of  association.  § 1320.  For  any  copy,  50  cents 
per  100  words.  § 1181. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  There  is  an  income  tax  of  two  per  cent,  on  net 
profits,  for  which  returns  are  to  be  made  between  July  1st  and  31st 
of  each  year.  §§  1279-1282.  Regular  tax  returns  are  required  to  be 
made  in  January  of  each  year.  § 1227.  (See  § 13,  “ Reports.”) 

3.  Incorporation. 

Incorporators.  Must  be  at  least  five.  A majority  must  be  resi- 
dents of  the  Territory.  § 2536. 

Articles  of  Association.  Are  signed  and  acknowledged  by  each 
of  the  incorporators  of  joint  stock  companies,  and  must  contain 
(§  2536): 

* References  are  to  the  Revised  Laws  of  Hawaii  (1905),  except  where  other- 
wise noted. 


101 


102 


CLASSIFIED  CORPORATION  LAWS. 


(1)  Name  of  the  corporation,  which  shall  be  followed  by 
the  word  “ Limited.” 

(2)  Place  of  its  principal  office. 

(3)  Purpose  of  the  company. 

(4)  Amount  of  capital  stock,  and  if  the  privilege  of  subse- 
quent extension  of  the  capital  stock  is  asked  for,  the  limit 
of  such  extension. 

(5)  Number  and  designation  of  officers  proposed. 

Or  a charter  may  be  granted  by  the  Treasurer  of  the  Territory, 
by  and  with  the  consent  of  the  Governor,  to  cemetery  associations 
and  other  corporations,  ecclesiastical  or  lay,  except  municipal  (§.  2542), 
on  written  petition,  accompanied  by  proof  that  three-fourths  of  the 
shares  have  been  subscribed  for,  and,  in  addition  to  the  statements 
required  of  joint  stock  companies,  the  time  within  which  it  is  to 
organize,  the  duration  of  the  corporation,  whether  the  liability  of  the 
stockholders  is  to  be  limited  to  the  amount  of  their  stock,  and  also 
whether  the  whole  or  any  part  of  the  capital  stock  is  to  be  paid  in 
before  commencing  operations,  and  if  part,  what  part.  Defective 
petition  is  to  be  returned  for  amendment  within  ten  days.  § 2545. 

Filing  and  Recording.  Articles  or  charter  are  recorded  by  the 
Treasurer  of  the  Territory,  free  of  charge,  in  a book  at  all  times 
open  to  the  public  (§  2537),  together  with  an  affidavit  sworn  to  by 
the  president,  secretary  and  treasurer  of  the  corporation,  stating  the 
number  of  shares,  amount  of  capital  stock,  the  names  of  the  sub- 
scribers for  shares,  and  the  amount  paid  in.  If  the  object  of  incor- 
poration is  to  take  over  and  conduct  any  existing  agricultural,  graz- 
ing, manufacturing,  shipping,  or  trading  business,  the  affidavit  must 
also  contain  a full  description  of  the  property  intended  to  represent 
the  capital  stock,  a detailed  valuation  of  each  item,  and  a copy  of  the 
conveyance  to  be  made  by  the  owners  to  the  corporation.  § 2538. 

4.  Organization. 

First  Meetings.  No  requirements.  Stockholders’  meeting  may 
be  attended  by  proxy.  Brown  v.  Carter,  15  H.  333. 

By-Laws.  May  be  passed  not  inconsistent  with  law.  § 2558. 
They  may  regulate  the  management  of  the  corporate  property,  the 
election  and  removal  of  officers,  the  transfer  of  stock  and  the  method 
of  voting  at  meetings  of  trustees,  directors  or  board  of  managers. 

§§  2554,  2558. 

Certificates.  None  required  to  show  completed  organization,  be- 
yond the  affidavit  to  be  filed  with  the  articles.  § 2538. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  articles  of  association  and  affidavit 
with  Treasurer  and  is  not  to  exceed  fifty  years  (§  2539),  except  of 
eleemosynary,  literary,  educational,  ecclesiastical  and  cemetery  asso- 


HAWAII. 


103 


ciations,  which  may  have  perpetual  charters.  §§  2544,  2558;  Co.  v. 
Austin,  5 H.  555. 

Beginning  Business.  May  not  be  commenced  until  three-fourths 
of  the  shares  shall  have  been  subscribed,  nor  until  ten  per  cent,  of 
the  stock  has  been  paid  in,  or  the  company  shall  have  acquired  prop- 
erty equal  to  ten  per  cent,  of  its  value.  § 2540. 

Renewal.  The  Treasurer  has  power  to  renew  charter  on  appli- 
cation of  two-thirds  of  the  stockholders,  if  satisfied  as  to  the  condition 
of  the  company’s  affairs.  § 2543. 

Forfeiture  of  Charter.  Not  provided  for.  Quo  warranto  will  lie 
against  corporations  not  legally  incorporated.  §§  2044-2052. 

Dissolution.  A petition  is  presented  to  the  Treasurer  with  a 
certificate  showing  that  at  a meeting  duly  called  for  that  purpose, 
three-fourths  of  the  stockholders  or  members  voted  to  dissolve,  and 
after  publishing  notice  thereof  for  sixty  days  in  Hawaiian  and  Eng- 
lish, the  Treasurer  on  hearing  and  proof  of  the  facts,  if  satisfied  that 
all  claims  against  the  corporation  are  discharged,  declares  the  corpo- 
ration dissolved.  § 2568. 


6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 2558. 

To  Hold  Property.  This  power  is  granted  for  corporate  pur- 
poses to  the  extent  limited  by  the  charter.  § 2558.  By  the  Organic 
Law,  holdings  of  realty  are  limited  to  1,000  acres.  R.  L,,  p.  61. 

Its  Own  Stock.  No  statutory  provision. 

Stock  of  Other  Corporations.  This  is  permitted.  § 2558. 
Two  corporations  may  enter  into  partnership.  § 2631. 

To  Borrow  Money.  The  corporate  indebtedness  is  limited  to  the 
amount  of  the  capital  stock.  § 2564. 

To  Do  Business  in  Other  States.  No  provision. 

Consolidation  or  Merger.  Corporations  may  form  partnerships. 
§§  2631,  2632. 

Amendment  of  Charter.  The  Treasurer  with  the  approval  of  the 
Governor  has  power  to  grant  amendments  within  the  scope  of 
the  law  governing  original  incorporation.  § 2546. 


7.  Capital  Stock. 

Amount.  Not  limited.  Must  be  stated  in  articles  of  association 
or  charter.  §§  2536,  2545. 

Initial  Payment.  Three-fourths  of  the  entire  capital  stock  must 
be  subscribed  for,  and  ten  per  cent,  paid  in  cash  or  property.  § 2540. 

Consideration  for  Issue.  May  be  cash  or  property,  but  a detailed 
description  of  the  property  with  an  itemized  valuation  must  be  veri- 


104 


CLASSIFIED  CORPORATION  LAWS. 


fied  and  filed  with  the  Treasurer.  § 2538.  The  directors  have  power 
to  sell  at  public  auction  a sufficient  number  of  shares  of  any  stock- 
holder who  shall  neglect  to  pay  any  assessment  levied  on  the  shares, 
until  the  whole  par  value  has  been  paid  in;  notice  of  ten  days  must 
be  given  resident  delinquent,  and  published  three  weeks  in  case  of 
delinquent  stockholder  residing  outside  of  the  Territory.  § 2551. 

Increase  or  Decrease.  The  privilege  must  be  requested  in  the 
articles  of  association,  with  the  amount  stated  to  which  it  is  desired 
to  extend  the  capital  stock.  §§  2536,  2545. 

Classes  of  Stock.  Preferred  stock  may  be  issued  on  a three- 
fourths  vote  of  the  stock,  the  dividend  on  same  not  to  exceed  ten 
per  cent.,  nor  to  be  cumulative.  § 2552. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  No  provisions  as  to  form  or  signatures. 
Every  certificate  must  show  plainly  how  much  of  its  par  value  has 
been  paid  in.  § 2550. 

Transfer  of  Stock.  May  be  made  by  endorsement  and  delivery 
of  certificates,  but  no  transfer  is  valid  except  between  the  parties 
until  entered  on  the  company  books,  such  entry  to  show  date  of 
transfer,  the  parties,  their  places  of  abode,  and  the  number  and  de- 
scription of  shares  transferred.  § 2549. 


8.  Stockholders. 

Rights  and  Powers.  They  control  the  issue  of  preferred  stock; 
also  dissolution  by  a three-fourths  vote.  §§  2552,  2568.  Four  may 
compel  meetings  by  application  to  circuit  judge.  § 2557.  Two-thirds 
may  apply  to  renew  corporate  existence.  § 2543. 

Liability.  Stockholders  are  liable  for  the  corporate  debts  to  the 
extent  of  the  unpaid  balance  on  their  stock.  §§  2562,  2563. 

Meetings.  Are  to  be  regluated  by  by-laws.  Must  be  held  within 
the  Territory.  Notice  may  be  waived  by  unanimous  written  consent 
entered  on  the  record,  all  the  members  being  present  in  person  or 
by  proxy.  § 2555.  May  be  called  by  circuit  judge  on  application  of 
four  or  more  members.  § 2557. 

Quorum.  Not  prescribed. 

Voting.  May  be  prescribed  by  by-laws.  Voting  may  be  by 
proxy.  § 2554;  Brown  v.  Carter,  15  H.  333. 

9.  Directors 

Number.  Not  prescribed.  Must  be  stated  in  articles  of  associa- 
tion. § 2536. 

Qualifications.  To  be  prescribed  by  by-laws.  § 2554. 

Powers.  They  remain  trustees  to  settle  affairs  after  dissolution. 
§ 2569.  They  have  the  usual  powers  of  control  over  the  corporate 
business  and  property. 


HAWAII. 


105 


Liability.  For  dividends  or  capital  distributed  except  from  profits 
arising  from  the  business,  the  directors  are  jointly  and  severally 
liable  to  the  extent  of  such  dividend  or  distribution.  § 2561.  Holding 
themselves  out  to  be  a corporation  without  having  complied  with  the 
law,  is  declared  a misdemeanor,  punishable  by  fine  not  to  exceed 
$5,000.  § 2565. 

Meetings.  To  be  provided  for  by  the  by-laws. 

Executive  Committee.  No  provision. 

10.  Officers. 

Are  to  be  prescribed  by  by-laws.  They  are  liable  for  any  false 
statements,  etc.  § 2565.  (See  also  “Liability”  under  § 9,  “Directors.”) 

11.  Principal  Office. 

Must  be  named  in  the  articles  of  association  or  petition  for  char- 
ter. §§  2536,  2545. 

12.  Corporate  Books.. 

What  Required.  A stock  register  is  prescribed,  to  show  names 
of  stockholders,  their  holdings,  and  the  date  when  they  became  owners 
of  stock.  § 2548;  Marx  v.  Parmelee,  13  H.  438. 

Where  Kept.  Not  specified,  but  by  implication  they  must  be 
kept  within  the  Territory.  §§  2548,  2566. 

Examination  of.  The  stock  register  is  to  be  open  for  the  in- 
spection of  stockholders  and  creditors  during  usual  business  hours 
of  each  day  except  Sundays  and  holidays;  and  the  custodian  must 
furnish  transcript.  § 2548. 

13.  Reports. 

An  annual  exhibit  of  the  corporate  affairs  is  required  to  be  pre- 
sented to  the  Treasurer  at  such  times  as  he  shall  require;  and  he 
has  also  the  right  to  examine  witnesses  and  call  for  the  production 
of  books  and  papers.  He  may  publish  such  report.  § 2566. 

Every  corporation  doing  business  for  profit  in  the  Territory 
shall  render  to  the  tax  assessor  of  its  tax  division,  between  July  1st 
and  31st  of  each  year,  a return  in  form  prescribed  by  the  Treasurer 
of  the  Territory,  stating:  (1)  Gross  receipts  from  all  sales  made  dur- 
ing the  preceding  year  to  June  30th  last  preceding,  at  home  and 
abroad.  (2)  Expenses,  exclusive  of  interest,  annuities  and  dividends. 
(3)  Interest,  annuities  and  dividends  paid,  stated  separately.  (4) 
Amount  expended  on  permanent  improvements.  (5)  Amounts  paid 
for  salaries  or  compensation  of  more  than  $600  to  each  person,  and 
names  and  amounts  paid  to  each.  § 1282. 

Publication  of  dissolution  is  required  to  be  made  by  the  Treas- 
urer of  the  Territory  for  sixty  days  in  Hawaiian  and  English.  § 2568. 
Annual  report  may  be  published.  § 2566. 


106  CLASSIFIED  CORPORATION  LAWS. 

(Hawaii) 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Before  beginning  business  a 
foreign  corporation  must  file  in  Territorial  Treasurer’s  office:  (1)  A 
certified  copy  of  charter.  (2)  Names  of  its  officers.  (3)  Name  of 
some  person  on  whom  process  may  be  served.  (4)  A certified  copy 
of  its  by-laws.  § 2623.  Fee,  $50.  § 2624.  Treasurer  thereupon  issues 

annual  license.  § 2625. 

Penalties  for  Non-Compliance.  Offending  corporations  are  de- 
clared guilty  of  a misdemeanor,  and  are  denied  the  benefit  of  the 
laws  of  the  Territory.  But  courts  may  grant  additional  time  within 
which  to  comply  with  the  law,  if  they  have  a good  defence  in  an 
action.  § 2626. 

Taxation.  They  pay  to  the  Treasurer  of  the  Territory  for  annual 
license  to  do  business,  one-fourth  of  one  mill  on  each  dollar  of 
authorized  capital  stock,  but  the  minimum  fee  is  $150.  § 2625. 

Books.  Territorial  Treasurer  has  power  at  any  time  to  call  for 
books  and  examine  them.  § 2628. 

Reports.  On  July  1st  of  each  year  they  must  file  with  the  Treas- 
urer a statement  of  all  matters  required  to  be  stated  by  Hawaiian 
corporations.  § 2627.  Treasurer  has  also  visitorial  power  at  any 
time  (§  2628)  and  may  apply  to  Circuit  Judge  at  Chambers  for  order 
to  compel  production  of  books  and  examination  of  witnesses.  § 2629. 

Attachments  Against.  Does  not  lie  against  foreign  corporations 
on  that  ground  alone.  § 1714* 

15.  Combinations  and  Monopolies. 

In  the  enumerations  of  unlawful  conspiracies  is  found:  To  estab- 
lish, manage  or  conduct  a trust  or  monopoly  in  the  purchase  or  sale 
of  any  commodity  (§  3091)  is  a conspiracy  of  the  second  degree,  pun- 
ishable by  imprisonment  at  hard  labor  not  more  than  two  years,  or 
fine  not  exceeding  $10,000  in  the  discretion  of  the  court.  § 3100. 


IDAHO. 


1.  Corporation  Laws.* 

Constitution.  (1889.)  Corporations  may  not  be  created  by  special 
or  local  laws  (Art.  Ill,  § 19),  but  shall  be  provided  for  by  general 
laws.  Art.  XI,  § 2.  Voting  may  be  by  proxy,  and  cumulative  voting 
is  prescribed  for  elections  of  directors.  Id.,  § 4.  “No  corporation  shall 
issue  stock  or  bonds,  except  for  labor  done,  services  performed,  or 
money  or  property  actually  received,  and  all  fictitious  increase  of  stock 
or  indebtedness  shall  be  void.”  Id.,  § 9.  Stock  of  corporations  shall 
not  be  increased  except  in  pursuance  of  general  law  and  with  the  con- 
sent of  a majority  of  the  stock,  obtained  at  a meeting  held  after  at  least 
thirty  days’  notice.  Id.,  § 9.  In  no  case  shall  any  stockholder  be 
individually  liable  in  an  amount  greater  than  the  amount  of  his  stock. 
Id.,  § 17.  Foreign  corporations  must  have  one  or  more  known  places 
-of  business  in  the  State  and  an  agent  on  whom  process  may  be  served. 
Id.,  § 10.  Trusts  prohibited.  Id.,  § 18. 

Statutes.  General  provisions  for  corporations  are  found  in  Idaho 
Civil  Code,  1901,  Title  XI,  Chapter  LXXX  (amended  by  Laws  of  1903 
and  1905),  which  provides  that  private  corporations  may  be  formed 
for  any  purpose  for  which  individuals  may  lawfully  associate  them- 
selves. § 2087.  The  remaining  chapters  of  the  Title  provide  especially 
for  railroad,  telegraph  and  telephone,  bridge,  ferry,  flume  and  boom, 
water  and  canal,  homestead,  insurance,  agricultural,  gas,  land  and 
building,  surety,  trust,  guarantee  title,  abstract  and  safety  deposit 
corporations  and  others.  The  general  provisions  of  the  Title  apply 
also  to  membership  corporations. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State,  for  filing  articles 
of  incorporation:  When  the  authorized  capital  stock  does  not  exceed 
$25,000,  $5;  when  it  exceeds  $25,000  and  does  not  exceed  $100,000,  $10; 
when  it  exceeds  $100,000  and  does  not  exceed  $500,000,  $20;  when  it 
exceeds  $500,000,  $25. 

For  recording  articles,  20  cents  per  folio;  for  issuing  certificate, 
$3;  for  certifying  and  affixing  seal,  $1.  For  copies,  20  cents  per  folio. 
Pol.  Code,  § 102. 

To  County  Recorder,  50  cents  for  filing  articles;  20  cents  per 
folio  for  recording  and  20  cents  per  folio  for  copies.  Pol.  Code,  § 1770. 

Franchise  Tax.  None  imposed. 

* References  are  to  Idaho  Civil  Code  of  1901,  Title  XI,  Chapter  LXXX,  ex- 
cept where  otherwise  noted. 


107 


io8 


CLASSIFIED  CORPORATION  LAWS. 


Local  Taxation.  Stockholders  of  corporations,  the  entire  capital 
or  property  of  which  is  assessed,  are  not  assessed  individually  for  such 
stock.  Pol.  Code,  § 1334.  Capital  stock  is  exempt  to  the  extent  that 
it  is  represented  by  property  which  has  been  assessed.  Id.,  § 1312, 
subdiv.  6.  Mining  claims  not  patented  are  exempt,  but  not  the  ma- 
chinery and  improvements.  Id.,  subdiv.  11.  All  private  irrigation 
property  is  exempt.  Id.,  subdiv.  12.  Returns  are  made  as  of  second 
Monday  of  January,  and  no  special  forms  are  prescribed  for  corpor- 
ations. Pol.  Code,  §§  1323,  1324. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more  and  one  of  them  must  be 
a bona  fide  resident  of  the  State.  L.  1905,  p.  163. 

Articles  of  Incorporation.  (§  2088.)  Must  be  subscribed  and  ac- 
knowledged by  each  of  the  incorporators  (L.  1905,  p.  163),  and  must 
set  forth  (§  9089)  : 

(1)  Name  of  the  corporation.  Corporations  may  select 
any  name  the  stockholders  see  proper.  The  corporate  name 
on  all  stock  certificates,  stationery,  etc.,  and  on  all  signatures 
to  official  or  public  documents,  must  be  followed  by  the  word 
“Limited.”  §§  2119,  2120.  If  this  is  not  done  the  provisions 
of  § 2119,  limiting  the  stockholder’s  liability  for  corporate 
debts  to  the  amount  of  his  unpaid  subscription,  do  not  apply. 
(See  “Liability  of  Stockholders,”  under  § 8.) 

(2)  Purpose  for  which  it  is  formed. 

(3)  Place  where  its  principal  business  is  to  be  transacted. 

(4)  Term  for  which  it  is  to  exist,  not  exceeding  fifty  years. 

(5)  Number  of  its  directors  or  trustees.  This  number  in 
a corporation  organized  for  profit  may  at  any  time  be  in- 
creased by  amendment  of  the  articles  to  any  number  riot  ex- 
ceeding fifteen.  (See  “Directors,”  under  § 9.) 

(6)  Amount  of  capital  stock  and  the  number  of  shares 
into  which  it  is  divided. 

(7)  If  there  is  a capital  stock,  the  amount  actually  sub- 
scribed and  by  whom.  §§  2089,  2093. 

(8)  Classification  of  directors,  if  desired,  into  three  classes, 
one  class  to  be  elected  each  year  for  three  years.  Laws  of 
1905,  pp.  161-162. 

Railroad,  wagon  road  and  telegraph  companies  have  additional 
statements.  § 2090;  L.  1905,  p.  162. 

Filing  and  Recording.  The  articles  of  incorporation  are  filed  in 
the  office  of  the  County  Recorder  of  the  county  where  the  principal 
business  is  to  be  transacted,  and  a copy  thereof,  certified  by  the 
County  Recorder,  with  the  Secretary  of  State.  The  Secretary  of  State 
thereupon  issues  to  the  corporation  over  the  official  seal,  a certificate 


IDAHO. 


109 


that  a copy  of  the  articles  containing  the  required  statement  of  facts 
has  been  filed  in  his  office,  which  completes  incorporation.  § 2094. 
A certified  copy  of  the  articles  must  also  be  filed  in  the  Recorder’s 
office  of  each  county  in  which  the  corporation  owns  property,  within 
sixty  days  after  acquiring  such  property.  § 2097. 

4.  Organization. 

First  Meetings.  Within  one  month  after  filing  articles,  a code  of 
by-laws  must  be  adopted  by  a majority  of  all  the  subscribed  stock,  at 
a meeting  called  on  two  weeks’  notice  by  advertising  in  a newspaper 
published  in  the  county  in  which  the  principal  place  of  business  is  lo- 
cated, or,  if  none  be  published  there,  in  one  published  at  the  capital 
of  the  State.  But  by-laws  may  be  adopted  by  written  assent  of  two- 
thirds  of  the  subscribed  stock  without  a meeting.  § 2098.  Meeting 
must  be  held  in  principal  office  or  the  place  where  the  principal  busi- 
ness is  to  be  transacted. 

First  meeting  of  directors  must  be  held  for  organization  im- 
mediately after  their  election,  in  the  place  prescribed  by  the  by-laws. 
L.  1905,  pp.  165,  166.  (See  “Election  of  Officers,”  under  § 4.) 

By-Laws.  The  by-laws  may  provide:  (1)  Time,  place  and  man- 

ner of  calling  and  conducting  meetings.  (2)  Number  of  members 
or  stockholders  constituting  a quorum.  (3)  Mode  of  voting  by  proxy. 
(4)  Time  of  annual  election  of  directors,  and  mode  and  manner  of 
giving  notice  thereof.  (5)  Duties  and  compensation  of  officers. 
(6)  Manner  of  election  and  terms  of  office  of  all  officers  other  than 
directors.  (7)  Time  and  place  of  holding  meetings  of  the  board. 
(8)  Suitable  penalties  for  violations  of  by-laws,  not  exceeding  in 
any  case  $100  for  any  one  offence.  L.  1905,  p.  164. 

All  by-laws  must  be  certified  by  a majority  of  the  directors  and 
the  secretary,  and  recorded  in  a “Book  of  By-Laws.”  § 2101. 

They  may  be  repealed  or  amended  by  a two-thirds  vote  of  the 
subscribed  stock  at  the  annual  meeting  called  for  that  purpose,  or 
that  power  may  be  delegated  to  the  directors  by  a similar  vote  at 
such  meeting.  § 2101. 

Certificates.  None  are  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  Commences  on  filing  articles  of  incorpora- 
tion (§  2094;  R.  R.  Co.  v.  Putnam  (Kan.),  12  Pac.  593),  and  extends 
fifty  years  unless  a less  period  is  provided  in  the  articles.  § 2089. 
It  may  not  be  inquired  into  collaterally.  § 2147. 

Beginning  Business.  Business  may  be  commenced  forthwith,  and 
must  be  commenced  within  one  year  from  the  date  of  incorporation. 
'§  2147- 

Renewal.  Every  corporation  formed  for  a period  less  than  fifty 
years  may,  prior  to  the  expiration  thereof,  extend  the  term  not  to 
exceed  fifty  years  from  its  formation.  § 2160. 

Forfeiture  of  Charter.  May  occur  on  failure  to  commence  busi- 


no 


CLASSIFIED  CORPORATION  LAWS. 


ness  within  one  year  from  incorporation,  but  only  at  the  suit  of  the 
State.  § 2147. 

Dissolution.  Is  effected  by  petition  to  the  district  court  of  the 
county  in  which  the  office  or  principal  place  of  business  is  situated. 
Such  petition  must  be  authorized  by  a two-thirds  vote  of  all  the  stock- 
holders or  members,  and  show  that  all  debts  have  been  satisfied. 
Code  Civ.  Pro.,  §§  3834-3840;  Clow  v.  Redman,  6 111.  568. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated  and  conferred.  § 2144. 

To  Hold  Property.  No  corporation  shall  acquire  or  hold  more 
real  property  than  may  be  reasonably  necessary  for  the  transaction 
of  its  business  or  the  construction  of  its  works.  § 2149;  Code  Civ. 
Pro.,  Ch.  179. 

The  cost  of  the  works  which  it  may  be  the  object  or  purposes  of 
the  corporation  to  construct,  must  not  exceed  its  capital  stock.  § 2148, 
subdiv.  4. 

Its  Own  Stock.  A corporation  may  bid  in  stock  sold 
for  non-payment  of  assessments  (§  2137),  but  such  stock  may  not  be 
voted  while  held  by  the  corporation.  § 2138. 

Stock  of  Other  Corporations.  This  power  is  not  con- 
ferred by  the  statutes. 

To  Borrow  Money.  The  indebtedness  of  the  corporation  must 
not  exceed  the  amount  of  the  capital  stock.  § 2148. 

To  Do  Business  in  Other  States.  This  is  not  prohibited  by  the 
statutes,  but  up  to  1905  all  meetings  were  required  to  be  held  at  the 
principal  place  of  business  or  office.  § 2116.  The  Laws  of  1905  pro- 
vide that  the  by-laws  may  prescribe  a place  for  holding  directors’ 
meetings  within  or  without  the  State.  L.  1905,  pp.  164,  166. 

Consolidation  or  Merger.  The  Constitution,  Art.  XI,  § 14,  pro- 
vides that  where  a corporation  consolidates  with  any  foreign  corpora- 
tion, the  same  shall  not  become  a foreign  corporation,  but  the  State 
courts  shall  retain  jurisdiction  over  the  corporate  property  within  the 
State  in  all  matters  as  if  no  consolidation  had  taken  place.  Land  and 
building  corporations  may  consolidate.  § 2306.  Railroad  corporations 
not  owning  competing  lines  may  consolidate.  § 2178. 

Amendment  of  Charter.  Is  provided  for  only  for  specific  pur- 
poses. (See  under  § 7,  “Increase  or  Decrease  of  Capital  Stock”;  under 
§ 5,  “Renewal  of  Corporate  Existence”;  under  § 9,  “Number  of  Direc- 
tors” and  § 11,  “Principal  Office.”) 

7.  Capital  Stock. 

Amount.  Not  prescribed.  Must  be  stated  in  articles  of  incor- 
poration. § 2089. 

Initial  Payment.  None  prescribed  but  amount  actually  subscribed 
must  be  stated  in  the  articles  of  incorporation.  § 2089. 


IDAHO. 


Ill 


Consideration  for  Issue.  No  corporation  shall  issue  any  stock  as 
paid  up,  or  credit  any  amount,  or  assessment  as  paid,  except  for 
money,  labor  or  services  actually  received  by  the  corporation  or  paid 
on  debts  of  the  corporation.  § 2119;  Const.,  Art.  XI,  § 9. 

The  Constitution  also  declares  all  fictitious  increase  of  stock  void, 
and  it  has  been  held  that  stock  can  not  be  increased  to  represent  an 
increased  value  of  the  property  in  which  the  original  capital  was 
invested.  Fitzpatrick  v.  Pub.  Co.,  83  Ala.  604. 

Assessments  may  be  levied  by  the  directors  after  one-fourth  the 
capital  stock  has  been  subscribed.  § 2125.  No  one  assessment  must 
exceed  ten  per  cent,  of  the  amount  of  the  capital  stock,  unless  the 
whole  capital  has  not  been  paid  up  and  the  corporation  is  unable  to 
meet  its  liabilities,  when  the  assessment  may  be  for  the  full  amount 
unpaid  on  the  capital  stock.  § 2126.  No  assessment  may  be  levied 
until  the  previous  one  has  been  fully  paid,  or  all  steps  taken  to  enforce 
payment.  § 2127.  Manner  of  levying  and  enforcing  assessments  pre- 
scribed. §§  2128-2143. 

Increase  or  Decrease.  This  can  be  effected  by  a majority  of  the 
directors  voting  to  call  a meeting  of  the  stockholders  for  that  pur- 
pose. Thirty  days’  personal  or  published  notice  of  the  time  and 
place  of  the  meeting  must  be  given.  Notice  must  contain  amount  of 
the  proposed  increase  or  decrease.  At  least  two-thirds  of  the  entire 
capital  stock  must  vote  in  favor  of  such  increase  or  diminution.  A 
certificate  signed  and  verified  by  the  chairman  and  secretary  of  the 
meeting  must  be  made,  showing  strict  compliance  with  the  law,  the 
amount  to  which  the  capital  stock  has  been  increased  or  decreased 
and  the  vote  by  which  the  object  was  accomplished.  This  certificate 
after  being  signed  by  a majority  of  the  directors  is  filed  in  dupli- 
cate with  the  County  Recorder  and  Secretary  of  State.  § 2148. 

Classes  of  Stock.  Not  provided  for  by  law. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  To  be  issued  when  fully  paid  up,  signed  by 
the  president  and  secretary.  If  provided  for  in  the  by-laws,  they 
may  be  issued  prior  to  full  payment,  under  such  restrictions  and  for 
such  purposes  as  the  by-laws  may  provide.  § 2121. 

8.  Stockholders. 

Rights  and  Powers.  The  stockholders  authorize  all  amendments 
of  articles.  §§  2118,  2148.  They  may  remove  directors  on  a two- 
thirds  vote.  § 2107.  One-half  of  the  stock  may  call  meetings.  § 2107. 
Three  or  more  stockholders  may  obtain  a warrant  from  justice  of 
the  peace  to  direct  one  stockholder  to  call  and  preside  at  a meeting. 
§ 2108. 

Liability.  Each  stockholder  is  individually  and  personally  liable 
to  the  full  amount  unpaid  upon  his  stock.  § 2119. 

This  limitation  as  to  liability  does  not  apply  unless  the  corporate 
name  on  all  stock  certificates,  stationery  and  in  signature  to  official 
or  public  documents,  is  followed  by  the  word  “Limited,”  either  writ- 
ten or' printed.  § 2120. 

Actions  may  be  brought  jointly  or  severally,  but  several  judgment 


112 


classified  corporation  laws. 


is  entered  against  each  stockholder  only  to  the  amount  found  by  the 
court  to  be  due  on  his  stock.  § 2119;  Aulbach  v.  Dahler,  43  Pac.  322. 

Meetings.  Meetings  of  the  stockholders  must  be  held  at  the  office 
or  principal  place  of  business  in  the  State.  § 2116;  L.  1905,  p.  166. 
If  no  other  provision  is  made  in  the  by-laws,  the  annual  meeting  must 
be  held  on  first  Tuesday  in  June.  § 2099. 

Notice.  Of  annual  meeting  must  be  given  by  publication  (§  2098), 
unless  otherwise  provided  in  the  by-laws.  L.  1905,  p.  163.  (See  “First 
Meetings,”  under  § 4.)  Meetings  may  be  held  without  notice  by 
waiver  and  consent  of  all  the  stockholders.  §§  2114,  2115. 

Quorum.  Is  constituted  by  a majority  of  the  subscribed  stock. 
§ 2109. 

Voting.  Must  be  by  ballot.  Voting  by  proxy  is  permitted 
(§  2104),  mode  to  be  prescribed  by  by-laws  (§  2100),  or  by  representa- 
tive. § 2109.  Cumulative  voting  is  provided  for  (§  2104),  in  accord- 
ance with  Art.  XI,  § 4 of  the  Constitution.  Stock  to  be  voted  must 
have  stood  in  the  name  of  the  voter  on  the  books  of  the  company 
at  least  ten  days  prior  to  meeting.  § 2109. 

9.  Directors. 

Number.  The  directors  must  not  be  less  than  three  nor  more 
than  fifteen.  § 2102;  Laws  of  1905,  p.  164.  The  number  may  be 
changed,  within  the  limits  stated,  by  a majority  vote  of  the  stock- 
holders. § 2089.  They  may  be  divided  into  three  classes.  Id.;  L.  1905, 
p.  161. 

They  may  be  removed  by  a two-thirds  vote  of  the  stock  at  a 
regular  meeting  called  on  notice  specifying  that  purpose,  given  as  for 
elections,  or  according  to  by-laws;  such  meeting  to  be  called  by  the 
president,  or  a majority  of  the  directors,  or  by  one-half  of  the  voting 
stock.  If  the  secretary  refuses  to  send  out  notices  according  to  such 
request,  the  notices  may  be  sent  out  by  stockholders  directly,  as  pre- 
scribed. § 2107. 

Qualifications.  Directors  of  corporations  for  profit  must  be  hold- 
ers of  stock  of  the  corporation  in  an  amount  to  be  fixed  by  the  by- 
laws, and  at  least  one  must  be  a citizen  and  bona  fide  resident  of  the 
State.  § 2102;  Laws  of  1905,  pp.  161-165.  Their  compensation  is  fixed 
by  the  by-laws.  § 2100. 

Powers.  The  making,  amending  or  repealing  of  by-laws  may  be 
delegated  to  the  directors  by  a two-thirds  vote  of  the  stock.  § 2101. 
They  may  fill  vacancies  on  the  board.  § 2102.  They  continue  as  trus- 
tees on  dissolution,  with  full  power  to  settle  the  corporate  affairs, 
unless  other  trustees  are  appointed  by  court.  § 2159. 

Liability.  For  making  dividends  otherwise  than  from  surplus 
profits,  and  for  dividing  or  paying  to  the  stockholders  any  part  of  the 
capital  stock,  and  for  reducing  or  increasing  the  capital  stock,  except 
as  provided  by  law,  the  directors  under  whose  administration  the 
same  occurred  (except  those  absent,  and  those  entering  their  dissent 
at  large  on  the  minutes  at  the  time)  are  jointly  and  severally  liable 
to  the  full  amount  of  such  improper  payments.  § 2106.  Officers  mak- 
ing any  false  certificates,  reports  or  public  notice  are  jointly  and 


IDAHO. 


1 13 

severally  liable  for  all  damages  resulting  therefrom.  § 2113.  The 
Penal  Code  (§§  5010-5026)  declares  the  various  acts  of  mismanage- 
ment of  corporations  above  mentioned  misdemeanors,  and  every  direc- 
tor is  deemed  to  possess  knowledge  (§  5019),  and  to  have  concurred, 
if  present,  unless  requiring  in  writing  his  dissent  to  be  entered  on 
the  minutes,  or  if  absent,  and  the  unlawful  act  appears  of  record, 
unless  resigning  within  six  months  thereafter,  or  requiring  in  writing 
within  that  time  his  dissent  to  be  entered  on  the  minutes.  §§  5020, 
5021. 

Meetings.  Meetings  of  directors  may  be  held  within  or  without 
the  State  as  specified  in  the  by-laws.  L.  1905,  p.  164.  When  no  pro- 
vision is  made  in  the  by-laws  for  regular  meetings  of  the  directors 
and  the  mode  of  calling  special  meetings,  all  meetings  must  be  called 
by  special  notice  in  writing,  to  be  given  to  each  director,  if  within  the 
State,  by  the  secretary  on  the  order  of  the  president,  or,  if  there  be 
none,  on  the  order  of  two  directors.  § 2117.  A majority  of  the  board 
of  directors  constitutes  a quorum  sufficient  for  the  transaction  of 
business.  § 2105;  L.  1905,  p.  165. 

Executive  Committee.  An  executive  committee  may  be  appointed 
by  the  directors  of  railroad,  wagon  road,  telegraph  and  telephone 
companies.  L.  1905,  p.  165. 

10.  Officers. 

A president — who  must  be  a director — a secretary  and  a treasurer 
are  prescribed.  § 2105.  Their  duties  and  compensation,  manner  qf 
election  and  term  of  office  may  be  provided  for  in  the  by-laws.  § 2100. 

11.  Principal  Office. 

One  must  be  maintained  in  the  State.  It  may  be  changed  by 
consent  in  writing  of  two-thirds  of  the  stock,  such  consent  to  be  filed, 
and  notice  thereof  published  once  a week  for  three  successive  weeks, 
giving  the  name  of  the  county  where  the  principal  office  is  situated 
and  that  to  which  it  intends  to  move.  § 2118. 

12.  Corporate  Books. 

All  corporations  for  profit  must  keep  a record  of  all  their  busi- 
ness transactions;  also  a journal  of  all  meetings  of  their  directors, 
members  or  stockholders.  This  journal  must  set  forth  every  act 
done  at  meetings  or  ordered  to  be  done;  who  were  present  and  who 
absent;  and,  if  so  requested  by  any  one,  the  time  must  be  noted  when 
such  party  entered  and  left  the  meeting.  On  similar  request  the  ayes 
and  noes  must  be  taken  and  recorded.  All  protests  must,  on  request, 
be  entered  in  full.  § 2150. 

Also  a “Stock  and  Transfer  Book,”  showing  alphabetically  the 
names  of  all  stockholders;  installments  paid  and  unpaid;  assessments 
levied  and  paid  or  unpaid;  a statement  of  every  transfer  or  alienation 
of  stock,  with  date,  and  by  and  to  whom;  and  all  other  matters  which 
may  be  required  by  the  by-laws.  §§  2151,  2122.  A “Book  of  By-Laws” 
is  prescribed.  § 2101. 


CLASSIFIED  CORPORATION  LAWS. 


114 


Where  Kept.  The  “Book  of  By-Laws”  is  expressly  directed  to 
be  kept  at  the  principal  office  in  the  State.  § 2101.  It  is  obviously 
contemplated  that  all  other  corporate  records  are  to  be  kept  there  as 
well,  though  not  expressly  required. 

Examination  of.  The  record  and  stock  books  are  to  be  open  to 
the  inspection  of  any  director,  member,  stockholder  or  creditor. 
§ 2151.  “Book  of  By-Laws”  is  to  be  open  to  inspection  of  the  public 
during  office  hours.  § 2101. 

13.  Reports. 

No  reports  are  required,  except  of  irrigation  companies  (§  2613); 
land  and  building  companies  (§  2304);  and  annual  affidavit  of  labor 
and  improvement  on  mining  claims.  § 2565. 

Publication  of  notices  may  be  avoided  by  personal  service  or  by 
unanimous  waiver.  §§  2098,  2114,  2148.  Other  publications  required 
are  of  change  of  principal  place  of  business  (§  2118),  notices  of  assess- 
ments and  delinquent  sales.  §§  2129-2133. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  foreign  corporation  shall 
do  any  business  in  the  State  without  having  one  or  more  known 
places  of  business,  and  an  authorized  agent  or  agents  therein  on 
whom  process  may  be  served,  nor  shall  it  have  or  enjoy  any  greater 
rights  or  privileges  than  domestic  corporations.  Const.,  Art.  XI, 
§ 10.  These  provisions  are  carried  into  effect  by  § 2162,  which  pro- 
vides for  the  filing  of  such  designation  of  agent  in  the  office  of  the 
Secretary  of  State  and  in  the  office  of  the  clerk  of  the  district 
court  of  the  county  in  which  the  corporation  has  its  principal  place 
of  business,  in  which  county  the  agent  must  also  reside.  § 2162. 
And  the  Laws  of  1903,  p.  49,  provide  that  every  foreign  corpora- 
tion before  doing  business  in  the  State,  must  file  a copy  of  its  articles 
of  incorporation,  duly  certified  by  the  Secretary  of  State  of  the  state 
of  its  incorporation,  in  the  office  of  the  recorder  of  the  county  in 
which  is  designated  its  principal  place  of  business  and  a copy  certified 
by  such  recorder,  with  the  Secretary  of  State,  paying  the  same  fees  as 
domestic  corporations. 

Penalties  for  Non-Compliance.  Every  corporation  failing  to  com- 
ply shall  be  denied  the  benefits  of  the  Statute  of  Limitations  of  the 
State  and  all  contracts  and  deeds  of  real  estate  made  prior  to  com- 
pliance shall  be  void  and  unenforceable  in  the  State  courts.  Laws  of 
1903,  pp.  49-50. 

Taxation.  Foreign  corporations  pay  the  same  fees  as  domestic 
corporations.  Laws  of  1903,  p.  49.  No  special  provisions. 

Books  and  Reports.  The  Laws  of  1903  further  give  all  foreign 
corporations  complying  with  its  provisions  all  rights  and  privileges 
(including  right  to  exercise  right  of  eminent  domain),  and  subjects 
them  to  all  the  laws  of  the  State  applicable  to  domestic  corporations. 


IDAHO. 


IIS 

L.  1903,  p.  50;  Const.,  Art.  XI,  § 10.  Stockholders’  liability  is  the 
same  as  those  of  domestic  corporations.  § 2119. 

The  penal  provisions  against  directors  and  officers  for  mismanage- 
ment apply  equally  to  domestic  and  foreign  corporations.  Penal 
Code,  §§  5010-5026,  § 5022. 

Attachments  Against.  Foreign  corporations  are  for  the  purposes 
of  jurisdiction,  non-residents.  Boyer  v.  R.  R.  Co.,  8 Idaho  74;  66  Pac. 
826.  They  do  not  acquire  residence  by  designating  an  agent.  Attach- 
ments will  lie  against  them  as  non-residents.  C.  C.  Pro.,  §§  3294, 
3295- 

15.  Combinations  and  Monopolies. 

Art.  XI,  § 18,  of  the  Constitution  provides:  “No  incorporated 

company  shall  directly  or  indirectly  combine  or  make  any  contract 
with  any  other  company,  through  the  stockholders  or  assignees  of 
stockholders  or  in  any  manner  whatsoever  for  the  purpose  of  fixing 
the  price  or  regulating  the  production  of  any  articles  of  commerce 
or  of  products  of  the  soil,  or  of  consumption  by  the  people.” 


ILLINOIS. 


1.  Corporation  Laws.* 

Constitution.  (1870.)  Special  legislation  granting  to  any  cor- 
poration any  special  or  exclusive  privilege  or  franchise  is  prohibited. 
Art.  IV,  § 22.  No  corporation  to  be  created  by  special  law  except 
charitable,  educational,  or  reformatory  corporations  under  control  of 
the  State.  Art.  XI,  § 1.  General  laws  shall  be  passed  governing  the 
organization  of  corporations.  Id.  Cumulative  voting  is  prescribed. 
Id.,  § 3- 

Statutes.  The  general  corporation  law  of  Illinois  is  contained 
in  Hurd’s  Revised  Statutes,  1903,  Ch.  32,  with  amendments  of  L.  1905, 
pp.  123-132.  Special  provisions  apply  to  railroads,  street  railroads, 
telegraph  and  telephone,  road  and  bridge,  warehouse  and  canal  com- 
panies, banks,  insurance,  cemetery  and  co-operative  companies  and 
some  few  other  special  corporations. 

Under  the  general  law  corporations  may  be  formed  for  any  law- 
ful purpose  except  banking,  insurance,  real  estate  brokerage,  opera- 
tion of  railroads  and  the  business  of  loaning  money.  § 1. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State,  before  license 
will  issue:  On  capital  stock  not  exceeding  $2,500,  $30;  over  $2,500 

but  not  exceeding  $5,000,  $50;  for  capitalizations  over  $5,000,  $50  for 
first  $5,000  and  $1  on  each  additional  $1,000.  Ch.  53,  § 10a.  Filing 
fee,  $1;  affixing  certificate  and  seal  to  articles  of  incorporation,  $1; 
certificate  without  seal,  25  cents;  for  copies  and  recording,  15  cents 
<per  hundred  words.  Id.,  § 10.  To  Recorder  of  Deeds,  10  cents  per 
hundred  words  for  recording  and  copies,  and  25  cents  for  certificate. 
Id.,  § 54;  L.  1905,  pp.  263,  266. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Stock  in  the  hands  of  individuals  is  not  taxed 
when  corporation  pays  tax  on  property  or  stock.  Excess  value  of 
stock  over  tangible  assets  is  taxed  to  corporation.  Ch.  120,  §§  3,  32; 
L.  1905,  p.  354.  Coal  mining,  manufacturing,  mercantile,  printing, 
newspaper  and  stock-breeding  corporations  are  exempt  from  returns 
of  and  tax  on  capital  stock.  Ch.  120,  §§  3,  32;  L.  1905,  pp.  354,  355. 

* Except  as  otherwise  noted,  references  are  to  Hurd’s  Revised  Statutes,  1903,  and 
sections  are  of  Ch.  32  of  such  statutes. 


Il6 


ILLINOIS. 


II 7 


Personal  property  is  listed  between  May  1st  and  July  ist  when  re- 
quired by  the  assessor.  Ch.  120,  § 5;  The  Hub  v.  Hanberg,  21 1 111. 
43  (1904).  (See  § 13,  “ Reports.”) 

General.  To  Secretary  of  State:  On  increase  of  stock,  $1  for 

each  $1,000  above  a total  .capitalization  of  $5,000,  and  $1  for  filing 
certificate  of  increase  (Ch.  53,  § 10a) ; filing  any  other  certificate, 
$1  (Id.,  § 10);  filing  annual  report,  $1.  § 193.  The  cost  of  publication 

of  notices  and  amendments  will  amount  to  from  $5  to  $15. 

3.  Incorporation. 

Incorporators.  Must  be  not  less  than  three  nor  more  than 
seven.  § 2.  No  requirements  as  to  residence. 

Formation. 

1.  Statement  of  Incorporation.  Must  be  signed  and 
acknowledged  by  each  of  the  incorporators,  and  set  forth  (§  2)  : 

(1)  Name  of  proposed  corporation.  No  license  will  be 
issued  for  a company  having  a name  the  same  or  similar  to 
an  existing  company.  §§  2,  50. 

(2)  Object  for  which  it  is  formed.  Plurality  of  objects 
permitted. 

(3)  Amount  of  capital  stock  and  the  number  of  shares  of 
which  the  stock  shall  consist.  Shares  shall  not  be  less  than 
$10  nor  more  than  $100  each.  § 7. 

(4)  Location  of  principal  office,  giving  town,  street  and 
number. 

(5)  Duration  of  the  corporation,  not  exceeding  ninety-nine 
years. 

2.  First  Filing.  This  statement  is  filed  with  the  Secretary 
of  State,  who  thereupon  issues  a license  to  the  incorporators  as 
commissioners  to  open  books  for  subscription  to  capital  stock, 
at  such  times  and  places  as  they  may  determine.  § 2. 

3.  First  Meeting.  As  soon  as  may  be  after  the  capital  stock 
has  been  fully  subscribed,  the  commissioners  must  convene  a 
meeting  of  all  the  subscribers,  for  the  purpose  of  electing  direc- 
tors or  managers  and  transacting  any  other  necessary  business. 
Notice  must  be  given  each  subscriber  by  mail  at  least  ten  days 
before  the  meeting.  § 3.  The  subscribers  may  attend  in  person 
or  by  proxy.  § 3,  Const.,  Art.  XI,  § 3.  Meeting  must  be  held 
within  the  State.  § 20. 

4.  Commissioners’  Report.  After  first  meeting  has  been 
held  and  organization  completed,  the  commissioners  make  a full 
report  of  the  proceedings  at  the  meeting,  including  the  notice, 
the  names  of  the  directors  or  managers  elected,  with  their  re- 
spective terms  of  office,  a copy  of  the  subscription  list,  a state- 
ment of  the  amount  of  capital,  not  less  than  one-half,  actually 
paid  in,  the  amount  of  such' capital  not  paid  in,  what  disposition 
has  been  made  of  the  stock  subscribed  and  not  paid,  and  if  any 


n8 


CLASSIFIED  CORPORATION  LAWS. 


proportion  of  the  stock  has  been  paid  in  property,  the  same  shall 
be  appraised  by  the  commissioners  and  they  shall  report  the  fair 
cash  value  thereof.  § 4;  L.  1905,  p.  131. 

5.  Final  Filing.  This  report  is  sworn  to  by  at  least  a 
majority  of  the  commissioners,  and  together  with  a statement 
setting  forth  the  post-office  address,  including  street  and  number, 
of  the  office  of  the  corporation,  is  filed  with  the  Secretary  of 
State,  who  thereupon  issues  a certificate  of  completed  organiza- 
tion, making  a copy  of  all  the  organization  papers  filed  in  his 
office,  duly  authenticated  by  him,  as  a part  thereof,  and  the  whole 
is  then  recorded  in  the  office  of  the  Recorder  of  the  county  in 
which  the  principal  office  is  located.  § 4. 

4.  Organization. 

First  Meetings.  For  first  meeting  of  stockholders,  see  “ Forma- 
tion,” subdiv.  3 under  § 3,  “ Incorporation.”  At  that  meeting  directors 
are  elected  and  any  other  necessary  business  is  transacted.  § 3. 

The  first  meeting  of  directors  can  not  be  held  until  after  issuance 
of  certificate  of  organization  by  the  Secretary  of  State.  The  directors 
then  meet,  adopt  by-laws  and  elect  officers.  § 6. 

By-Laws.  Are  to  be  adopted  by  the  directors.  § 6.  Must  pro- 
vide for  calling  meetings  of  directors  (§  20);  may  prescribe  notice  and 
quorum  at  all  meetings  (Id.);  for  transfer  of  stock,  and  for  stock 
certificates  (§  7),  and  generally  for  the  government  and  regulation  of 
the  corporate  affairs. 

Certificates.  (See  “Commissioners’  Report,”  subdiv.  4,  under  § 3, 
“Incorporation.”) 

5.  Corporate  Existence. 

When  Commenced.  On  recording  of  certificate  of  complete 
organization.  § 4.  Is  limited  to  ninety-nine  years.  § 2.  Continues 
two  years  after  expiration  by  limitation  or  otherwise  for  the  purpose 
of  settling  the  corporate  affairs.  § 10. 

Beginning  Business.  May  be  commenced  forthwith  and  must  be 
commenced  within  two  years  after  the  date  of  the  license.  § 4.  But 
all  the  capital  stock  must  be  subscribed  in  good  faith  (§  18),  and 
one-half  must  be  actually  paid  in.  L.  1905,  p.  131.  If  the  incorpora- 
tors assume  to  act  as  a corporation  before  the  requirements  of  the 
law  are  fully  complied  with,  they  are  jointly  and  severally  liable  for 
all  debts  contracted.  § 18. 

Renewal.  No  provisions.  May  be  effected  by  reorganization. 
For  thirty  days  after  expiration  or  dissolution  a majority  of  the 
stockholders  retain  the  exclusive  right  to  reorganize  under  the  same 
name.  §§  28*4,  49e. 

Forfeiture  of  Charter.  Charter  may  be  forfeited  for  failure  to 
commence  business  within  two  years  after  granting  of  license.  § 4. 
If  a corporation  ceases  to  do  business  or  exercise  its  corporate  fran- 


ILLINOIS. 


119 


chises,  the  Attorney  General  may  proceed  in  the  circuit  courts  to 
dissolve  it.  § 149.  And  for  violation  of  statutes  against  trusts,  pools 
and  combines,  etc.  (Ch.  38,  § 269a-t),  quo  warranto  lies  for  forfeiture 
of  its  charter  rights.  § 269m.  Failure  to  file  annual  report  is  prima 
facie  evidence  of  being  out  of  business,  and  shall  work  a forfeiture 
of  the  charter.  Procedure  is  set  forth.  §§  193,  194  et  seq. 

Dissolution.  May  be  had  by  a two-thirds  vote  of  the  whole 
capital  stock,  at  a meeting  called  for  that  purpose,  on  notice  signed 
by  a majority  of  the  directors  stating  time,  place  and  object,  and 
served  personally  or  by  mail  at  least  thirty  days  before  the  meeting, 
and  published  three  weeks  in  a newspaper  in  the  county  in  which  the 
principal  office  is  located.  § 49a-d.  A full  record  of  all  the  proceed- 
ings, showing  also  that  all  the  corporate  debts  are  paid,  and  assets 
distributed,  must  be  executed  by  the  president  and  secretary,  under 
the  corporate  seal,  and  recorded  in  the  Recorder’s  office,  and  notice 
of  the  dissolution  published  three  successive  weeks  within  three 
months  after  the  dissolution.  Copy  of  the  record  certified  by  the 
Recorder  is  filed  in  Secretary  of  State’s  office.  § 49d. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  granted.  § 5. 

To  Hold  Property.  This  power  is  limited  to  such  property  as  is 
necessary  for  the  transaction  of  the  corporate  business.  § 5;  Alexan- 
der v.  Club,  no  111.  65;  Barnes  v.  Suddard,  117  111.  237.  If  realty  is 
acquired  in  securing  any  debt  or  liability  due  the  corporation,  if  not 
sold  otherwise,  it  must  be  offered  at  public  auction  at  least  once  a 
year,  and  if  not  sold  in  five  years,  the  State’s  Attorney  will  proceed 
by  information  and  have  sale  compelled.  § 5.  (See  § 13,  “Reports.”) 
Its  Own  Stock.  No  statutory  provision.  The  courts, 
however,  recognize  this  right  when  exercised  in  good  faith,  without 
injury  to  creditors.  Nat.,  etc.  Bk.  v.  Co.,  191  111.  128  (1901);  Ins.  Co. 
v.  Swigert,  135  111.  150,  162. 

Stock  of  Other  Corporations.  Mining  and  manufactur- 
ing companies  may  own  stock  in  railroad  companies  running  lines  to 
or  between  their  works.  § 148.  Subscriptions  to  stock  by  other 
corporations  can  be  made  only  when  power  is  specifically  given  in 
their  charters,  or  necessarily  implied  from  them.  McCoy  v.  Expo- 
sition, 186  111.  356,  360  (1900). 

To  Borrow  Money.  This  power  is  specifically  granted.  § 5. 
But  for  increasing  corporate  indebtedness  beyond  the  amount  of  the 
capital  stock,  directors  and  officers  become  personally  liable  for  the 
excess.  § 16;  Coquard  v.  Co.,  171  111.  480.  Bondholders  can  not  in 
any  way  be  given  the  right  to  vote  at  stockholders’  meetings.  Durkee 
v.  People,  53  111.  App.  396;  also  155  111.  354. 

To  Do  Business  in  Other  States.  Acts  of  directors  at  meetings 
held  without  the  State  are  void  unless  ratified  by  a two-thirds  vote 
of  the  board  at  subsequent  regular  meeting.  § 20;  State  Bk.  v.  Bk., 
168  111.  519;  Harding  v.  Co.,  182  111.  551  (1899). 

Consolidation  or  Merger.  Is  permitted  with  another  company  of 
the  same  kind  or  engaged  in  the  same  general  business  and  in  the 


120 


CLASSIFIED  CORPORATION  LAWS. 


same  vicinity.  Procedure  same  as  for  amendments.  § 50.  Railroad 
companies  owning  parallel  or  competing  lines  may  not  consoli- 
date. § 57. 

Amendment  of  Charter.  Charter  may  be  amended  (§  50):  To 
change  name  or  place  of  business;  to  enlarge  or  change  the  object 
for  which  company  was  formed;  to  increase  or  decrease  capital  stock; 
to  change  number  or  par  value  of  shares  of  capital  stock;  to  change 
number  of  directors,  or  to  consolidate  with  any  other  corporation  of 
the  same  kind,  or  in  the  same  vicinity.  § 50.  Any  such  amendment 
must  be  assented  to  by  a two-thirds  vote  of  all  the  stock  (§  52)  given 
at  a meeting  called  for  that  purpose  on  notice  served  personally  or 
by  mail  at  least  thirty  days  before  the  meeting  and  published  for 
three  weeks,  § 51.  Certificate  of  the  proceeding,  verified  by  the 
president  under  the  corporate  seal,  must  be  prepared  in  duplicate  and 
one  copy  filed  in  the  office  of  the  Secretary  of  State.  The  other  copy 
must  be  filed  and  recorded  in  the  Recorder’s  office  in  the  county  in 
which  the  principal  office  of  the  corporation  is  located.  § 53.  Notice 
of  any  such  amendment  must  also  be  published  three  weeks.  § 54. 

7.  Capital  Stock. 

Amount.  Not  prescribed  by  statute.  Is  set  forth  in  and  fixed 
by  statement  of  incorporation.  § 2. 

Initial  Payment.  The  full  amount  of  the  capital  stock  must  be 
subscribed  before  organization  can  be  completed.  § 4.  At  least  one- 
half  must  be  actually  paid  in  in  cash  or  property  before  certificate 
of  complete  organization  will  issue.  L.  1905,  p.  131. 

Consideration  for  Issue.  No  direct  provisions,  but  the  statutes 
provide  that  if  any  proportion  of  the  capital  stock  is  paid  for  in 
property,  the  same  must  be  appraised  by  the  incorporators  and  the 
fair  cash  value  thereof  stated  in  their  report  to  the  Secretary  of 
State.  § 4,  as  amended  by  L.  1905,  p.  131. 

Assessments  are  to  be  levied  by  the  directors  in  accordance  with 
the  by-laws,  but  must  be  pro  rata.  Suit  may  be  brought  to  enforce 
assessment.  § 15;  McCoy  v.  Exposition,  186  111.  356. 

Increase  or  Decrease.  Is  accomplished  in  the  same  manner  as 
any  other  amendment,  provided  the  decrease  is  not  to  the  prejudice 
of  creditors.  § 50.  (See  “Amendment  of  Charter,”  under  § 6.) 

Classes  of  Stock.  No  provisions. 

Par  Value  of  Shares.  Shall  not  be  less  than  $10  nor  more  than 
$ico.  § 7.  Number  of  shares  and  their  par  value  may  be  changed 
by  regular  amendment.  § 50.  (See  “Amendment  of  Charter,” 
under  § 6.) 

Stock  Certificates.  Are  to  be  provided  for  in  by-laws.  § 7. 

Transfer  of  Stock.  Is  to  be  made  as  provided  by  the  by-laws 
(§  7),  but  every  transfer  of  stock  on  which  any  instalment  remains 
unpaid  must  be  recorded  in  the  Recorder’s  office.  Assignor  and 
assignee  are  jointly  liable.  § 8. 


ILLINOIS: 


121 


8.  Stockholders. 

Rights  and  Powers.  The  stockholders  may  amend  the  organisa- 
tion papers  by  a two-thirds  vote.  §§  49,  50.  Two-thirds  of  the  full 
paid  stock  may  compel  meetings.  § 22.  Stockholders  may  change 
number  of  directors  by  majority  vote.  §§  6,  59-64;  Harding  v.  Co., 
182  111.  551  (1899). 

Liability.  Stockholders  are  liable  for  the  corporate  debts  to  the 
extent  of  the  amount  unpaid  on  their  stock.  § 8.  For  assuming  to 
act  as  a corporation  without  complying  with  the  provisions  of  the 
law,  and  before  all  the  stock  named  in  the  articles  of  incorporation 
is  subscribed  in  good  faith,  the  persons  so  acting  are  jointly  and 
severally  liable  for  all  debts  contracted.  § 18.  On  stock  assigned 
before  it  is  fully  paid,  assignee  and  assignor  are  jointly  and  severally 
liable.  § 8.  If  assignee  has  notice  that  such  stock  is  not  fully  paid, 
he  is  primarily  liable.  Parmelee  v.  Price,  208  111.  544  (1904);  Foote 
v.  Bank,  194  111.  600  (1902);  Co.  v.  Co.,  205  111.  42  (1903). 

Meetings.  Must  be  held  within  the  State.  § 3. 

Notice.  May  be  prescribed  by  by-laws.  If  not  so  prescribed, 
thirty  days’  notice  personally  or  by  mail  and  three  weeks’  publication 
must  be  given.  §§  22,  51.  Two-thirds  of  the  full  paid  stock  may  call 
meetings  on  all  signing  notice  and  filing  copy  thereof  with  the  presi- 
dent, sending  one  copy  to  each  director  and  publishing  copy  three 
weeks.  The  secretary  must  record  all  the  facts.  § 22. 

Quorum.  Is  prescribed  by  by-laws. 

Voting.  May  be  by  proxy.  § 3.  Cumulative  voting  at  elections 
is  provided  for  (§  3;  Const.,  Art.  XI,  § 3),  and  directors  or  managers 
are  not  to  be  elected  in  any  other  manner.  Id. 

9.  Directors. 

Number.  Must  be  not  less  than  five  nor  more  than  eleven. 
§§  5o>  59-  Classification  into  three  classes  is  permitted  (§  3);  also 
change  of  number,  by  majority  vote  of  the  stock.  §§  6,  50,  59-64. 
(See  “Amendment  of  Charter,”  under  § 6.) 

Qualifications.  No  statutory  requirements.  Directors  of  railroad 
corporations  must  be  stockholders.  Durkee  v.  Askren,  155  111.  354. 

Powers.  Directors  have  power  to  adopt  by-laws.  They  are  to 
fix  compensation  of  officers.  They  have  general  control  of  the  prop- 
erty and  affairs  of  the  corporation.  § 6. 

Liability.  If  the  corporate  debts  at  any  time  exceed  the  amount 
of  the  capital  stock,  the  assenting  directors  are  personally  liable  for 
such  excess.  § 16.  So  also  for  declaring  any  dividend  when  com- 
pany is  insolvent  or  which  would  render  it  insolvent,  or  diminish  its 
capital  stock,  they  are  liable  to  the  extent  of  corporate  debts  then 
existing  and  contracted  while  they  remain  in  office.  § 19.  They  are 
also  liable  for  debts  if  they  assume  to  act  as  a corporation  before  capi- 
tal stock  has  been  fully  subscribed  for  in  good  faith.  5 18;  Kent  v. 
Clark  & Co.,  181  111.  237  (1899). 

Meetings.  Must  be  held  within  the  State,  but  the  proceedings  of 
directors’  meetings  held  without  the  State  may  be  ratified  by  a two- 


122 


CLASSIFIED  CORPORATION  LAWS. 


thirds  vote  of  the  entire  board  at  a regular  meeting  held  within  the 
State.  § 20.  Notice  is  to  be  prescribed  in  by-laws,  but  when  all  are 
present  and  sign  written  consent  on  the  record,  no  notice  is  required. 
Id.  Quorum  must  be  prescribed  in  the  by-laws. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  A president,  secretary  and  treasurer  are  prescribed  and 
such  other  agents  as  may  be  appointed  by  the  directors.  § 6.  Officers 
signing  any  report  or  public  notice,  false  in  any  material  representa- 
tion, are  jointl}^  and  severally  liable  for  all  damages  arising  there- 
from. § 2i.  (See  also  “ Liability,”  under  “ Directors,”  § 9.) 

11.  Principal  Office. 

One  must  be  maintained  in  the  State  and  its  location,  with  street 
and  number,  given  in  statement  of  incorporation,  before  certificate  of 
organization  is  obtained.  It  must  be  likewise  stated  in  annual- report. 
§ 193.  It  may  be  changed  by  regular  amendment.  §§  50-58.  But 
no  such  removal  will  be  allowed  from  a town,  county  or  municipality 
which  has  contributed,  or  any  of  its  inhabitants  have  contributed,  some 
material  inducement  to  such  corporation  to  locate  there.  § 50. 

12.  Corporate  Books. 

What  Required.  Correct  books  of^  account  must  be  kept.  § 13. 

Where  Kept.  The  books  of  account  must  be  kept  at  the  principal 
office  or  place  of  business  in  the  State.  § 13. 

Examination  of.  Every  stockholder  has  the  right  to  examine  the 
account  books  at  all  reasonable  hours  personally  or  by  attorney. 
§ 13;  Coquard  v.  Co.,  171  111.  480. 

13.  Reports. 

An  annual  report  is  required  to  be  filed  with  the  Secretary  of 
State,  between  February  i-st  and  March  1st,  stating  the  location  of 
the  principal  office  of  the  corporation  in  the  State,  with  town,  street 
and  number;  the  names  of  its  officers  and  their  residences,  giving 
town,  street  and  number,  and  the  dates  of  the  expiration  of  their 
terms;  whether  or  not  the  corporation  is  pursuing  an  active  business 
under  its  charter,  and  the  kind  of  business  engaged  in.  This  report 
is  to  be  signed  and  acknowledged  by  the  president,  or  some  other 
officer  of  the  corporation,  under  the  corporate  seal.  A fee  of  $1  is 
paid  on  filing.  § 193;  People  v.  Rose,  207  111.  352. 

Within  twenty  days  from  December  1st  of  each  year,  the  presi- 
dent, secretary  or  treasurer  of  any  stock  corporation  must  file  in  the 
office  of  the  Secretary  of  State  and  record  in  the  Recorder’s  office 
of  the  county  a duly  verified  statement  and  description  of  any  real 
estate  acquired  during  the  year  in  securing  any  debt  or  liability  due 
the  corporation,  with  the  date  of  acquiring  title.  § 17. 


ILLINOIS. 


123 


Within  thirty  days  after  September  1st  of  each  year,  an  affidavit 
must  be  sent  to  the  Secretary  of  State,  on.  form  supplied  by  him, 
showing  that  the  company  is  not  guilty  of  any  act  in  violation  of  the 
laws  against  trusts.  (See  § 15,  “ Combinations  and  Monopolies.”) 
A fine  of  $50  is  prescribed  for  each  day’s  failure  to  file  this  report. 
Ch.  38,  § 269I1. 

Every  corporation,  except  coal  mining,  manufacturing,  mercantile, 
printing,  newspaper  or  stock-breeding  corporations,  must  file  with  the 
assessor  of  the  district  in  which  the  office  or  place  of  business  is 
located,  in  addition  to  the  schedule  of  other  property  to  be  listed,  a 
sworn  statement  of  its  capital  stock,  stating:  (1)  Name  and  location 
of  company;  (2)  amount  of  capital  stock  authorized;  number  of  shares 
into  which  it  is  divided;  (3)  amount  paid  up;  (4)  market  value,  or  if 
none,  actual  value  of  shares;  (5)  total  amount  of  indebtedness,  ex- 
cept for  current  expenses;  (6)  assessed  valuation  of  all  tangible  prop- 
erty. Ch.  120,  § 32;  L.  1905,  p.  354.  Report  must  be  made  between 
May  1st  and  July  1st. 

Publication  is  required  for  notices  of  meetings,  for  all  amend- 
ments and  of  dissolution.  All  such  publications  must  be  made  in  a 
newspaper  published  in  the  county  in  which  the  principal  office  or 
place  of  business  is  located.  §§  3,  22,  51,  54. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Application  by  the  corporation 
to  the  Secretary  of  State  must  be  duly  sworn  to  by  its  president  and 
secretary,  stating:  What  business  it  purposes  to  pursue;  the  amount 
of  its  capital  stock;  whether  it  is  transacting  or  intends  to  transact 
business  in  any  other  state  or  country;  proportion  of  business  to  be 
carried  on  in  Illinois;  amount  paid  in  on  its  capital  stock;  what  prop- 
erty and  assets  (with  an  estimate  of  the  value  thereof)  will  be  em- 
ployed in  the  State  of  Illinois;  if  any  of  its  capital  has  not  been  paid 
in,  what  disposition  is  to  be  made  thereof;  the  names  of  its  president, 
secretary  and  directors,  and  their  residences;  location  of  its  principal 
office  in  Illinois,  and  name  and  address  of  some  attorney  in  fact  on 
whom  process  may  be  served;  also  if  required  by  the  Secretary  of 
State,  the  names  and  residences  of  all  the  stockholders  as  shown  by 
the  corporate  records.  The  corporation  must  also  file  therewith  a 
duly  authenticated  copy  of  its  charter  or  articles  or  certificate  of 
incorporation.  The  Secretary  of  State  has  full  power  of  further  ex- 
amination into  the  affairs  of  the  corporation,  and  information  thus 
obtained  is  filed  together  with  the  copy  of  its  charter  and  acts  as  a 
limitation  on  its  powers.  The  Secretary  of  State  thereupon  issues 
a certified  copy  of  all  the  papers  and  a certificate  of  authority  stating 
the  object  and  powers  to  be  exercised  by  such  corporation  in  the 
State.  Trust  Co.  v.  R.  R.  Co.,  208  111.  419.  Fees  are  the  same  as 
organization  fees  of  domestic  corporations,  and  are  computed  on  the 
amount  of  capital  stock  employed  within  the  State.  L.  1905,  pp. 
124-126;  Barnes  v.  Suddard,  117  111.  237. 

Penalties  for  Non-Compliance.  Fine  of  not  less  than  $1,000  and 
not  more  than  $10,000,  to  be  recovered  at  the  suit  of  the  State.  L. 
1905,  P-  126.  Agents  and  officers  are  also  guilty  of  misdemeanor, 
punishable  by  fine  of  $200  to  $1,000  for  each  offence  (Id.,  p.  127), 
and  no  suit  may  be  maintained  in  the  State  Courts. 


124 


CLASSIFIED  CORPORATION  LAWS. 


(Illinois) 

For  violation  of  statutes  against  trusts,  foreign  corporations  for- 
feit their  right  to  do  business  in  the  State  and  are  also  subject  to 
fine  of  $50  for  each  day’s  failure  to  file  affidavit  as  required  by  those 
statutes.  They  are  also  subject  to  all  the  regulations,  liabilities,  re- 
strictions and  duties  imposed  on  domestic  corporations.  § 26;  T. 
1905,  p.  124;  Ins.  Co.  v.  Bauerle,  143  111.  459;  G.  S.  Prov.  Assn.  v. 
Lloyd,  145  111.  620. 

Taxation.  Of  property  same  as  for  domestic  corporations. 

Books.  Proper  books  must  be  kept  at  the  principal  office  or 
place  of  business  in  the  State.  § 26;  L.  1905,  p.  124. 

Reports.  Every  foreign  corporation  admitted  to  do  business  in 
the  State  must  keep  constantly  on  file  with  the  Secretary  of  State 
an  affidavit  of  the  president  and  secretary,  showing  location  of  its 
principal  office  in  the  State  and  the  name  of  a person  in  said  office 
on  whom  process  may  be  served.  Must  also  make  annual  reports  and 
returns  as  required  of  domestic  corporations.  They  are  also  subject 
to  examination  by  the  Secretary  of  State  at  any  time,  and  their 
authority  may  be  revoked  by  him  on  cause  shown.  L.  1905,  pp. 
124-126. 

Attachments  Against.  No  special  provisions. 

15.  Combinations  and  Monopolies. 

Trusts,  pools  and  combines,  and  trusts  and  conspiracies  against 
trade  are  prohibited  under  fines  of  from  $50  to  $15,000  for  repeated 
offences,  and  forfeiture  of  charter  by  quo  warranto  proceedings. 
Foreign  corporations  also  forfeit  right  to  do  business  in  the  State. 
An  affidavit  in  form  prescribed  by  the  Secretary  of  State,  must  be 
filed  with  that  officer  annually  about  September  1st,  certifying  that 
the  corporation  has  not  violated  the  provisions  of  the  anti-trust  law. 
Penalty  for  failure,  $50  for  each  day.  Ch.  38,  § 269a-!.  These 
statutes  have  been  upheld  by  the  courts.  Harding  v.  Glucose  Co., 
182  111.  551  (1899);  Chicago,  etc.  Co.  v.  People,  214  111.  421  (1905). 


INDIANA. 


1.  Corporation  Laws.* 

Constitution.  (1851.)  Corporations,  other  than  banking,  shall 
not  be  created  by  special  act.  Art.  XI,  § 212.  State  not  to  take  stock 
in  or  loan  credit  to  any  corporation.  Id.,  § 211. 

Statutes.  In  Burns’  Annotated  Statutes  of  Indiana,  Revision  of 
1901,  §§  3423-3452,  are  found  general  provisions  applicable  to  all  cor- 
porations; in  §§  3453-3461,  provisions  for  foreign  corporations;  §§  4583- 
4622  relate  to  voluntary  associations;  and  in  §§  5051-5128  are  found 
special  provisions  for  manufacturing  and  mining  companies.  Agri- 
cultural, bridge,  building,  canal,  navigation,  board  of  trade,  detective, 
drainage,  hydraulic,  oil  and  natural  gas,  steam  packet,  insurance,  rail- 
road, street  railway,  surety,  telegraph,  telephone,  turnpike,  trust  and 
deposit,  town  building,  water  works,  tobacco  warehouse,  patrons  of 
husbandry,  foreign  investments,  as  well  as  religious,  educational  and 
voluntary  associations  are  provided  for  in  §§  4444-5540.  Amendments 
are  found  in  L.  1903,  Chs.  29,  37,  73,  122,  128,  152  and  220,  and  L.  1905, 
Chs.  139,  151. 

Under  §§  5051-5128  corporations  may  be  formed  to  carry  on  any 
kind  of  manufacturing,  mining,  mechanical,  real  estate,  mercantile  or 
chemical  business.  § 5051;  L.  1905,  Ch.  139.  Other  purposes  are 
enumerated  under  voluntary  associations.  §§  4583-4622. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  For  filing  arti- 
cles of  association,  on  capitalization  of  $10,000  or  under,  $10;  over 
$10,000,  one-tenth  of  one  per  cent.  (§  7631);  for  recording  the  articles, 
$1  if  not  over  200  words,  and  10  cents  for  each  additional  100  words; 
50  cents  for  certificate.  § 6407. 

To  Recorder  of  Deeds,  10  cents  per  folio,  but  first  600  words,  $1. 
Certificates,  25  cents;  certificate  and  seal,  50  cents.  § 6523. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Special  tax  provisions  apply  to  banks,  railroads, 
street  railroads,  telegraph  companies,  insurance  and  gas  companies, 
etc.  (§§  8469-8507;  L.  1903,  Ch.  29),  but  shares  of  domestic  corpora- 
tions, except  banks,  are  not  taxed  where  the  property  represented  is 
taxed.  §§  8411,  8492.  Manufacturing,  mining  and  other  corporations 
make  returns  between  March  1st  and  May  15th  of  each  year  (See 
§ 13,  “ Reports”),  and  on  failure  to  do  so.  State  Auditor  assesses  and 
adds  twenty-five  per  cent.  §§  8491-8493. 

* Sections  given  are  of  Burns’  Statutes,  1901. 


125 


126 


CLASSIFIED  CORPORATION  LAWS. 


General.  Consolidation  is  considered  as  creating  a new  corpora- 
tion and  for  filing  certificate  to  effect  it,  or  to  increase  capital  stock, 
the  same  fees  are  charged  as  upon  original  incorporation.  On  reduc- 
tion of  capital,  change  of  name,  domicile  or  purpose,  a fee  of  $5  must 
be  paid  and  on  other  amendments  and  certificates,  20  cents  per  folio, 
with  minimum  fee  of  $5;  no  charge  for  filing  certificate  of  election. 
§§  763 1,  7632. 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 5051.  No  require- 
ments as  to  residence. 

Articles  of  Association.  Must  be  signed  and  acknowledged  in 
duplicate  by  each  of  the  incorporators,  and  specify  (§§  4583,  5051; 
L.  1903,  Ch.  73): 

(1)  The  corporate  name,  which  must  not  be  similar  to  that 
of  any  other  association  incorporated  in  the  State. 

(2)  Amount  of  capital  stock,  number  of  shares,  and  amount 

of  each  share,  which  must  not  exceed  $100.  § 5058.  No 

limitations  as  to  amount  of  capital  stock.  (See  § 7,  “ Capital 
Stock.”) 

(3)  Objects  of  the  association  with  the  proposed  plan  of 
doing  business  fully  set  out.  More  than  one  business  may 
be  stated  by  manufacturing,  mercantile  and  mining  companies. 
L.  1905,  Ch.  139. 

(4)  Name  and  place  of  residence  of  each  incorporator. 

(5)  Principal  place  of  business.  Must  be  within  State. 
(See  § 11,  “ Principal  Office.”) 

(6)  Term  of  existence.  Of  corporations  for  profit  must 
not  exceed  fifty  years.  §§  4583,  5051.  For  other  corporations 
it  may  be  perpetual. 

(7)  A description  of  the  corporate  seal. 

(8)  Manner  of  election  or  appointment  of  directors  and 
officers. 

(9)  Number  of  trustees,  directors  or  managers,  with  the 
names  of  those  who  shall  manage  the  corporate  affairs  for 
the  first  year. 

Filing  and  Recording.  The  articles  of  association  are  first  pre- 
sented to  the  Secretary  of  State,  with  full  statement  of  proposed  plan 
of  doing  business.  The  Secretary  of  State,  if  articles  are  approved 
by  him  and  the  required  fees  are  paid,  files  and  records  same  and 
issues  a certificate  of  incorporation.  A duplicate  of  the  articles  of 
association  is  filed  and  recorded  in  the  Recorder’s  office  of  the  county 
in  which  the  principal  place  of  business  is  located.  § 4595m  A copy 
is  also  filed  in  the  office  of  the  State  Auditor.  § 4595p. 


INDIANA. 


127 


4.  Organization. 

First  Meetings.  Of  stockholders  must  be  called  by  notice  signed 
by  three  or  more  members,  at  least  ten  days  before  the  meeting, 
personally  or  by  publication  in  some  state  newspaper  published  in 
or  nearest  to  the  county  in  which  the  corporation  is  established. 
§ 3427.  Must  be  held  within  the  State  at  principal  place  of  business. 
§§  3447,  5126. 

The  first  board  of  directors  is  named  in  the  articles  of  association. 
§§  4583,  5051.  No  special  provisions  as  to  its  first  meeting.  It  elects 
a president,  who  must  be  a director,  and  also  elects  a secretary  and  a 
treasurer,  who  may  be  the  same  person.  §§  4610,  5055. 


By-Laws.  Must  be  adopted  by  the  incorporators.  They  are  not 
prescribed  as  to  scope  or  contents.  A copy  of  all  by-laws  must  be 
filed  with  the  State  Auditor.  § 4595P- 


Certificates.  When  organization  is  completed;,  a statement  there- 
of may  be  filed  with  the  clerk  of  the  circuit  court  of  the  proper 
county,  and  the  court  may  thereupon  enter  an  order  declaring  the 
existence  of  the  corporation,  which  order  shall  be  conclusive  as  to 
that  fact.  § 3423. 


5.  Corporate  Existence. 

When  Commenced.  Does  not  commence  until  articles  of  associ- 
ation are  filed  with  Secretary  of  State  and  in  Recorder’s  office. 
§§  4595,  5°52.  Of  corporations  for  profit  is  limited  to  fifty  years. 
§§  4583,  5051.  Continues  for  three  years  after  expiration  by  limita- 
tion, forfeiture  or  otherwise  for  purpose  of  settling  affairs.  § 3429. 
Can  not  be  questioned  collaterally.  Marion  Bond  Co.  v.  Co.,  160 
Ind.  558  (1902).  Order  of  court  declaring  corporate  existence  is 
conclusive.  § 3423. 

Beginning  Business.  May  be  commenced  forthwith. 

Renewal.  I11  case  of  manufacturing,  mercantile  and  mining  com- 
panies, may  be  had  by  a vote  of  the  stockholders  at  an  annual  meet- 
ing, but  not  to  exceed  fifty  years  from  its  first  organization.  § 5058. 
Certified  copy  of  the  record  and  proceedings  must  be  filed  with  the 
Secretary  of  State  within  thirty  days.  Id. 

Forfeiture  of  Charter.  For  any  usurpation  of  power,  or  violation 
of  law,  the  court  may  in  its  discretion  declare  a forfeiture  of  the 
corporate  franchises.  §§  1145-1160.  Also  for  violation  of  laws  against 
unlawful  combinations.  § 3312b, s.  When  any  judgment  against  the 
corporation  remains  unpaid  for  one  year  without  stay  or  appeal,  the 
circuit  court  may  declare  the  franchise  forfeited  and  appoint  a re- 
ceiver. § 3439.  The  State  Auditor  has  visitorial  power  over  corpora- 
tions and  may  cause  proceedings  for  injunction,  receivership  or  quo 
warranto.  § 4595P- 

Dissolution.  May  be  had  by  unanimous  vote  of  the  board  of 
directors,  sustained  by  similar  vote  of  the  stockholders  at  a meeting 
called  by  prescribed  notice.  The  consent  of  all  mortgagees  and 


128 


CLASSIFIED  CORPORATION  LAWS. 


judgment  creditors  of  the  corporation  must  be  obtained  in  writing. 
All  such  consents,  duly  certified,  and  a list  of  the  names  and  resi- 
dences of  all  directors  and  officers  are  filed  with  the  Secretary  of 
State,  who  issues  duplicate  certificates  of  filing,  one  of  which  is  filed 
with  the  County  Recorder,  and  a copy  published  in  a newspaper  in 
English  two  weeks.  L.  1903,  Ch.  152. 


6.  Corporate  Powers. 


General.  General  powers  are  enumerated.  §§  3425,  45950.  They 
may  be  enlarged  by  written  consent  of  all  the  stockholders,  acknowl- 
edged, filed  and  recorded  as  were  the  original  articles.  § 5078. 

To  Hold  Property.  This  power  is  given  to  business  corporations 
in  general  terms.  §§  45950,  4595s.  Manufacturing  companies  may 
hold  real  estate  necessary  to  carry  on  their  business,  and  such  as  may 
be  taken  to  secure  or  pay  indebtedness.  §§  5053,  5078.  A majority 
vote  of  preferred  stock  is  required  to  convey  and  mortgage.  § 5068. 
Unless  restrained  by  statute  a corporation  may  deal  with  its  property 
the  same  as  may  a natural  person.  Levering  v.  Bimel,  146  Ind.  545. 

Its  Own  Stock.  No  provisions. 

Stock  of  Other  Corporations.  A manufacturing,  etc. 
company  may  not  use  its  funds  in  the  purchase  of  stock  of  any  other 
corporation  except  on  the  written  consent  of  all  the  stockholders, 
both  of  the  purchasing  and  the  selling  corporation.  § 5059.  Manu- 
facturing companies  may  take  and  hold  stock  in  water  works  com- 
panies. § 5087. 

To  Borrow  Money.  This  power  is  fully  given  for  corporate  pur- 
poses (§  34 42),  with  power  to  issue  bonds.  § 45950. 

To  Do  Business  in  Other  States.  This  power  is  granted  as  to 
any  other  state  or  territory  of  the  United  States,  and  applies  specially 
to  manufacturing,  mercantile  and  mining  companies.  § 5078.  But 
office  may  not  be  moved  to  another  state.  Aspinwall  v.  Co.,  20  Ind. 
492,  498.  Corporations  may  make  contracts  outside  of  the  State  and 
for  that  purpose  directors  may  meet  outside  the  State.  Wright  v. 
Bundy,  11  Ind.  398. 

Consolidation  or  Merger.  Is  fully  permitted  (§  3424),  and  is  to 
be  accomplished  practically  as  original  incorporation.  Certified 
copies  of  original  charters  must  be  filed.  Chicago,  etc.  Co.  v.  State, 
153  Ind.  134.  Merger  of  manufacturing,  etc.  companies  organized  for 
similar  purposes  is  provided  for.  L.  1903,  Ch.  220. 

Amendment  of  Charter.  No  general  provisions  exist,  but  amend- 
ments are  provided  for  under  the  various  subjects  in  which  changes 
may  be  made.  Most  of  them  may  be  made  by  the  directors.  No  such 
amendments,  however,  are  of  legal  effect  until  a certificate  thereof  is 
filed  with  the  Secretary  of  State  and  recorded  in  the  Recorder’s  office 
in  which  the  original  articles  were  filed.  § 4617.  Name  may  be 
changed  by  resolution  of  board  of  directors  (§  3452)  or  by  petition 
to  the  court  under  Code  of  Civil  Procedure,  certified  copy  of  decree 


INDIANA. 


129 


to  be  filed  with  Secretary  of  State  within  ten  days  after  entry. 
§§  1012-1016,  7631;  L.  1905,  Ch.  151.  (See  under  § 7,  “Increase  or 
Decrease;  ” also  under  § 9,  “ Powers  of  Directors.”) 

7.  Capital  Stock. 

Amount.  Is  to  be  stated  in  articles  of  associatoin.  Law  pre- 
scribes no  limit  (§  5058),  except  as  to  natural  gas  companies,  in 
which  the  capital  stock  must  not  exceed  $2,000,000.  L.  1903,  Ch.  128. 

Initial  Payment.  Within  eighteen  months  from  the  incorpora- 
tion of  manufacturing,  mercantile  and  mining  companies,  the  entire 
capital  stock  must  be  paid  in.  § 5060.  Certificate  of  full  payment 
must  be  signed  by  the  president  and  majority  of  the  directors  and 
recorded  with  the  clerk  of  the  circuit  court  of  the  county  within 
thirty  days  after  payment.  § 5062. 

Consideration  for  Issue.  May  be  necessary  property  or  labor  at 
its  fair  cash  value,  but  transaction  must  be  bona  fide.  Coffin  v.  Rans- 
dell,  no  Ind.  417  (1886);  Clow  v.  Brown,  150  Ind.  185  (1897). 

Assessments  may  be  made  at  discretion  of  directors  in  manufact- 
uring, mercantile  and  mining  corporations  for  amounts  unpaid  on 
stock  subscriptions.  On  failure  to  pay  for  thirty  days  after  call, 
treasurer  may  sue,  or  by  giving  three  weeks’  notice  in  a newspaper 
in  the  county,  if  any,  or  by  posting  in  three  public  places,  may  sell 
a sufficient  number  of  shares.  §§  3425,  5061. 

Increase  or  Decrease.  Capital  stock  of  manufacturing,  etc.  com- 
panies may  be  increased  by  a two-thirds  vote  of  the  outstanding 
stock  at  a meeting  held  on  not  less  than  ten  days’  notice,  a certified 
copy  of  the  record  and  proceedings  being  filed  with  the  Secretary  of 
State  within  thirty  days  thereafter.  § 5058;  L.  1903,  Ch.  37.  Reduc- 
tion may  be  made  by  the  stockholders  at  a meeting  called  for  that 
purpose,  a certified  copy  of  the  vote  to  be  filed  in  the  office  of  the 
clerk  of  the  circuit  court  within  thirty  days  thereafter,  and  a duplicate 
in  the  office  of  the  Secretary  of  State.  § 5063. 

Classes  of  Stock.  Preferred  stock  not  exceeding  double  the 
amount  of  the  common  stock  may  be  issued  in  shares  of  not  more 
than  $100  each,  if  provided  for  in  certificate  or  articles  of  association. 
§§  5064,  5065.  Or  it  may  be  authorized  by  three-fourths  vote  of  the 
common  stock  at  any  legal  meeting.  In  the  latter  case  a certificate 
signed  by  the  president,  attested  by  the  secretary  and  duly  acknowl- 
edged, must  be  filed  with  the  Secretary  of  State  within  thirty  days 
thereafter,  showing  the  amount  of  preferred  stock,  the  number  of 
shares,  and  the  amount  of  each.  § 5066.  Preferred  stock  is  entitled 
to  dividends  not  to  exceed  eight  per  cent,  per  annum,  and  at  all  times 
to  have  priority  over  common  stock  to  extent  of  its  face  value,  and 
arrears  of  interest  and  dividends.  § 5067.  Preferred  stock  is  to  be  at 
all  times  redeemable  at  par  on  terms  stated  in  the  certificate.  § 5067; 
L.  1903,  Ch.  122.  Preferred  stockholders  are  not  liable  for  corporate 
debts,  and  have  no  vote,  except  on  conveying  or  mortgaging  real 
property  and  on  declaring  dividends  on  the  common  stock  to  the 
impairment  of  capital,  in  both  of  which  cases  a majority  vote  of  such 
stock  is  necessary.  § 5068.  Certificate  of  redemption  of  such  stock 
must  be  filed  within  thirty  days  thereafter.  § 5069. 


130 


CLASSIFIED  CORPORATION  LAWS. 


Par  Value  of  Shares.  Is  not  to  exceed  $100  each.  §§  4583,  5058, 
5064.  The  amount  may  be  changed  by  a vote  of  two-thirds  of  the 
board  of  directors.  § 3449. 

Stock  Certificates.  The  certificates  for  shares  must  be  issued  in 
progressive  order,  and  every  stockholder  is  entitled  to  a certificate 
signed  by  the  treasurer.  § 3425. 

Transfer  of  Stock.  Is  to  be  governed  by  by-laws.  §§  4595,  5059. 

8.  Stockholders. 

Rights  and  Powers.  The  stockholders  make  by-laws,  may  en- 
large powers  of  corporation  (§§  3425,  5078),  elect  directors,  control 
increase  or  reduction  of  capital  stock  (§§  5058,  5063;  L.  1903,  Ch. 
37),  and,  by  unanimous  or  three-fourths  vote,  dissolution  (L.  1903, 
Ch.  152),  purchase  of  stock  of  other  corporations  (§  5059),  or  issue  of 
preferred  stock  (§  5066),  but  do  not  have  all  the  usual  powers  of 
amendment,  some  of  which  are  conferred  upon  the  directors. 

Liability.  Stockholders  of  manufacturing,  mercantile  and  mining 
companies  shall  be  liable  only  for  the  amount  of  stock  subscribed  by 
them  respectively,  except  as  to  debts  to  laborers  and  employees,  for 
which  they  are  individually  liable.  § 5077. 

In  other  corporations  in  case  of  insolvency,  each  stockholder  is 
liable  in  an  amount  equal  to  the  amount  of  his  stock  at  the  time  the 
debts  were  contracted,  and  the  directors,  with  the  assent  of  the 
stockholders,  may  increase  this  liability  to  three  times  the  amount 
of  such  stock.  Resolution  fixing  such  liability  to  be  filed  with  Secre- 
tary of  State.  §§  3451,  5128.  If  stock  be  withdrawn  or  refunded  to 
the  stockholders  before  payment  of  the  corporate  debts,  the  stock- 
holders are  jointly  and  severally  liable  for  such  debts.  § 3430. 

Meetings.  Must  be  held  at  the  principal  place  of  business  named 
in  the  charter,  or  as  subsequently  changed.  §§  3447,  5126.  Time  for 
annual  meeting  for  election  of  directors  of  manufacturing  or  mining 
company  may  be  fixed  in  articles  of  association.  L.  1903,  Ch.  37. 

Notice.  No  statutory  provisions.  May  be  prescribed  by  by-laws. 

Voting.  Each  stockholder  shall  have  one  vote  for  each  share 
of  stock  held  by  him  ten  days  previous  to  the  meeting.  §§  3425, 
3447,  5126. 

Proxies.  Voting  by  proxy  is  permitted,  manner  to  be  prescribed 
by  the  corporation.  §§  3425,  5055. 

9.  Directors. 

Number.  The  directors  of  manufacturing,  mercantile  and  mining 
corporations  shall  be  not  less  than  three  nor  more  than  eleven. 
§ 5054.  The  number  may  be  changed  to  any  number  not  exceeding 
thirteen,  by  a resolution  of  the  board.  §§  3448,  5127. 

Qualifications.  Directors  of  manufacturing,  mercantile  and  min- 
ing corporations  must  be  stockholders  and  residents  of  the  United 
States.  § 5054. 


INDIANA. 


131 


Powers.  They  fill  vacancies  in  the  board  (L.  1903,  Ch.  37),  may 
change  the  corporate  name  (§  3452),  their  own  number  (§  3448),  the 
par  value  of  shares  (§  3449),  and  the  place  of  business.  § 3446.  They 
are  trustees  on  voluntary  dissolution.  L.  1903,  Ch.  152. 

Liability.  For  knowingly  declaring  and  paying  any  dividend 
when  the  company  is  insolvent  or  which  renders  it  insolvent,  assent- 
ing directors  are  jointly  and  severally  liable  for  existing  corporate 
debts.  To  avoid  liability  dissenting  directors  must  file  their  written 
objection  with  the  secretary  of  the  company  and  the  county  clerk 
§ 5075.  For  failure  to  file  certified  copy  of  vote  reducing  capital  stock, 
directors  of  manufacturing  and  mining  companies  are  jointly  and 
severally  liable  for  corporate  debts  contracted  after  the  thirty  days’ 
limit  allowed  for  filing  and  before  they  file  the  required  certificate. 
§ 5063.  For  failure  to  file  certificate  of  redemption  of  preferred  stock, 
the  liability  is  the  same.  § 5069;  Clow  v.  Brown,  150  Ind.  185. 

Meetings.  May  be  held  without  the  State.  Wright  v.  Bundy, 
11  Ind.  398.  Quorum  must  be  a majority.  § 5054.  No  provisions  as 
to  notice. 

Executive  Committee.  No  provisions. 

10.  Officers. 

A president,  elected  by  the  directors  from  their  number,  is  pre- 
scribed for  manufacturing,  mercantile  and  mining  companies  (§  5054) ; 
also  a secretary  and  treasurer,  who  must  give  bonds  and  be  sworn. 
One  person  may  hold  both  of  these  offices.  § 5055. 

Liability.  For  materially  false  representations  in  any  certificates, 
reports  or  public  notices,  or  for  failure  to  make  required  reports  or 
notices,  with  resulting  injury,  the  officers  signing  the  same,  knowing 
them  to  be  false,  or  who  are  guilty  of  any  such  failure,  are  jointly  and 
severally  liable  for  resulting  damages.  § 5073.  Also  for  issuing  stock 
as  full  paid  when  it  is  not  paid.  American  Co.  v.  Ellis,  156  Ind.  212 
(1900). 

11.  Principal  Office. 


The  town  or  city  in  which  the  principal  place  of  business  is  to 
be  located  must  be  named  in  the  articles  of  association.  §§  4583, 
5125.  It  may  be  changed  by  the  directors.  §§  3446,  5125.  But  must 
always  be  maintained  within  the  State.  Aspinwall  v.  Co.,  20  Ind. 
492;  Id.,  498. 

12.  Corporate  Books. 

What  Required.  A stock  book,  to  contain  an  alphabetical  list  of 
the  stockholders,  with  their  residences  and  number  of  shares,  and 
date  of  transfer  of  stock  to  them,  is  prescribed.  § 3433.  A record 
of  all  proceedings  and  accounts  in  proper  books  is  prescribed.  § 459Sr. 

Where  Kept.  The  stock  book  is  to  be  kept  at  the  office  or 
principal  place  of  business.  § 3433. 


132 


CLASSIFIED  CORPORATION  LAWS. 


Examination  of.  The  stock  book  is  subject  to  the  inspection  of 
creditors  and  stockholders  or  their  representatives  during  business 
hours,  and  they  may  also  make  extracts.  § 3433.  A penalty  is  im- 
posed of  $50  for  every  refusal,  payable  to  the  individual  refused,  and 
an  additional  penalty  of  $50  for  every  day  of  continued  failure,  to  be 
recovered  at  the  suit  of  the  State.  The  officers  or  directors  refusing 
are  also  liable  for  all  damages  resulting.  § 3434. 

13.  Reports. 


Every  manufacturing,  mercantile  and  mining  company  must  an- 
nually within  twenty  days  from  January  1st,  publish  a report  in  a 
newspaper  in  or  nearest  to  its  county,  stating  the  amount  of  its 
capital,  assessments  made  and  actually  paid  in,  and  existing  debts, 
to  be  signed  by  the  president  and  a majority  of  the  directors  and 
verified  by  the  same  officers  and  the  secretary.  § 5071;  Clow  v. 
Brown,  150  Ind.  185,  198. 

Tax  returns  are  to  be  delivered  to  the  assessor  in  form  prescribed 
by  him  between  March  1st  and  May  15th  of  each  year,  under  penalty 
of  $100  a day  for  each  day  of  delay  after  May  15th.  These  returns 
must  be  duly  sworn  to  by  the  president  or  other  accounting  officer, 
and  must  set  forth  particularly:  (1)  Name  and  location  of  the 

company.  (2)  Amount  of  capital  stock  authorized  and  number  of 
shares  into  which  it  is  divided.  (3)  Amount  of  capital  stock  paid  up. 
(4)  Market  value  or  actual  value  of  the  shares  of  stock.  (5)  Total 
amount  of  indebtedness  except  for  current  expenses,  excluding  from 
such  expenses  amounts  paid  for  purchase  or  improvement  of  property. 
(6)  Value  of  tangible  property.  (7)  Difference  in  value  between 
tangible  property  and  capital  stock.  (8)  Name  and  value  of  each 
franchise  or  privilege  owned  or  enjoyed  by  the  corporation.  § 8491; 
L.  1903,  Ch.  29. 

A copy  of  amendments  and  by-laws  must  be  filed  with  the  State 
Auditor  (§  4595p),  who  has  visitorial  powers. 

Publication  is  required  of  annual  report  in  January  of  each  year. 
§ 5071.  Notice  of  liquidation  must  be  published  in  the  English  lan- 
guage in  a newspaper  of  the  State  at  or  nearest  to  the  county  where 
the  principal  place  of  business  is  located.  L.  1903,  Ch.  152.  Notice  of 
sale  of  stock  on  non-payment  of  assessment  must  be  published  three 
weeks.  § 5061. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  must  file 
with  the  Secretary  of  State  a certified  copy  of  their  articles  or  certifi- 
cate of  incorporation/duly  authenticated,  and  a duly  verified  state- 
ment of  the  proportion  of  their  capital  stock  represented  by  property 
located,  and  business  transacted  in  the  State  of  Indiana.  On  such 
portion  of  their  capital  stock  they  pay  incorporating  taxes  and  fees 
equal  to  those  required  of  domestic  corporations,  except  that  on  the 
first  $10,000  or  under  of  such  amount,  the  tax  is  $25  instead  of  $10. 
The  Secretary  of  State  thereupon  issues  certificate  of  authority  stat- 
ing the  amount  of  the  entire  capital  and  also  the  amount  thereof 
represented  in  Indiana.  L.  1903,  Ch.  127. 

Agents  must  deposit  in  the  clerk’s  office  of  the  county  in  which 


INDIANA. 


133 


they  propose  doing  business,  their  power  of  attorney  or  other  author- 
ity under  which  they  act  (§  3453),  together  with  a duly  authenticated 
copy  of  order  or  resolution  or  other  authority  of  the  board  of  direc- 
tors consenting  to  being  sued  in  the  State  of  Indiana  by  service  on 
such  agent.  § 3454. 

Foreign  manufacturing  and  mining  corporations  may  hold,  con- 
vey and  mortgage  real  estate  for  the  purpose  of  their  business  to  the 
same  extent  as  domestic  corporations.  § 5098. 

Penalties  for  Non-Compliance.  Inability  to  sue  in  State  courts 
and  fine  of  not  less  than  $1,000,  with  directions  to  State  officers  to 
recover  and  enforce  the  same.  § 3461c.  Also  forfeiture  of  all  right 
to  do  business  or  hold  property  in  the  State,  and  all  contracts  are 
rendered  void  (§  3460),  and  agents  are  fined  not  less  than  $50.  § 3459. 
Foreign  corporations  are  specially  subject  to  the  provisions  of  the 
anti-trust  laws.  § 3312I1,  s. 

Taxation.  Taxation  of  foreign  corporations  in  State  is  same  as 
for  domestic  corporations.  §§  8469-8507.  Shares  of  foreign  corpora- 
tions are  taxed  in  the  hands  of  inhabitants  of  the  State.  § 8411. 

Books.  Foreign  corporations  must  keep  proper  books  to  enable 
them  to  comply  with  the  constitutional  and  statutory  provisions. 
These  books  must  be  kept  at  the  place  for  transaction  of  business 
within  the  State.  § 3461a. 

Reports.  Every  foreign  corporation  doing  business  in  the  State 
must  annually  in  the  month  of  January  file  with  the  Auditor  of  State 
a report,  containing  a full  and  complete  statement  of  the  corporate 
condition  on  December  31st  of  the  previous  year.  Form  prescribed 
by  State  Auditor.  If  it  appears  from  this  report  that  the  corporation 
is  solvent,  the  Auditor  issues  a license  for  the  ensuing  year.  § 3030c,  j. 

Attachments  Against.  Lie  on  the  ground  of  being  a foreign 
corporation. 

15.  Combinations  and  Monopolies. 

Combinations  to  lessen  free  competition  or  to  compel  manu- 
facturers to  go  out  of  business,  etc.  (§  33i2g-u),  are  unlawful  and 
void,  and  penalties  are  provided  of  forfeiture  of  charter  and  fines 
against  individuals  of  from  $100  to  $5,000  and  imprisonment  from  one 
to  ten  years.  Individuals  may  sue  for  price  paid  for  any  goods  the 
sale  of  which  is  controlled  by  trust. 


INDIAN  TERRITORY. 


(See  Arkansas  Laws  for  general  provisions.) 

1.  Corporation  Laws. 

31  United  States  Statutes  at  Large  (1901),  Ch.  379,  p.  794,  puts  in 
force  in  the  Indian  Territory  so  far  as  applicable  and  not  in  conflict 
with  previous  congressional  legislation,  the  corporation  laws  of 
Arkansas  as  contained  in  Mansfield’s  Digest  of  the  Statute  of  Arkan- 
sas, §§  504  to  509,  and  §§  960  to  1035  inclusive  (corresponding  to  Ch. 
47,  Sandels  & Hill’s  Statutes  1894).  § 1. 

The  substitution  of  necessary  words  in  application  of  the  law  is 
provided  for  as  follows:  For  “county,”  “judicial  district;”  for  “Coun- 
ty court,”  “United  States  courts;”  for  “Secretary  of  State,”  “Clerk  of 
the  United  States  Circuit  Court  of  Appeals  for  the  Indian  Territory”; 
for  “clerk  of  the  county,”  “clerk  of  the  judicial  district”;  for  “General 
Assembly,”  “Congress  of  the  United  States”;  and  for  “vest  in  the 
State”  in  § 1035,  “vest  in  the  United  States,”  § 2. 

It  is  further  provided  that  the  Clerk  of  the  United  States  Circuit 
Court  of  Appeals  is  to  receive  the  same  fees  and  compensation  as 
is  prescribed  for  the  Secretary  of  State  in  the  Arkansas  law,  and  that 
the  clerk  of  the  judicial  district  is  to  receive  the  same  fees  as  for 
County  Clerks  of  Arkansas.  § 2. 

It  is  also  provided  that  companies  may  be  incorporated  under 
the  act  to  construct,  own  and  operate  electric  railroads,  telephone  and 
telegraph  lines  in  the  Indian  Territory.  Id. 

2.  Foreign  Corporations. 

The  United  States  Statutes  also  provide  that  foreign  corpora- 
tions may  be  authorized  to  do  business  in  the  Territory,  subject  to 
the  same  regulations,  limitations,  liabilities  and  exercising  no  other 
or  greater  powers,  priviliges  or  franchises  than  domestic  corpora- 
tions. § 3- 

Before  beginning  business  they  must  file  in  the  office  of  the  Clerk 
of  the  United  States  Court  of  Appeals  for  the  Territory,  a certificate 
under  the  seal  of  the  company  and  signed  by  the  president,  designat- 
ing an  agent  residing  in  the  places  where  said  Court  is  held,  upon 
whom  service  of  process  may  be  made  and  also  designating  the  prin- 
cipal places  of  business  of  the  corporation  in  the  Territory.  § 4. 

Penalties  for  Non-Compliance.  All  contracts  with  citizens  or 
residents  of  the  Territory  shall  be  void  and  not  enforceable  in  any 
United  States  Court  in  the  Territory.  § 5. 

Attachments  Against.  Lie  on  the  ground  of  being  a foreign  cor- 
poration. Stat.  1899,  § 331. 


134 


IOWA. 


Enactments  of  1906. 


5.  Corporate  Existence. 

Forfeiture  of  Charter.  Any  domestic  corporation  not  maintaining 
an  office  in  the  State  is  required  to  authorize  the  Secretary  of  State  to 
receive  service  of  summons  or  other  legal  process.  If  it  neglects  to 
do  so  it  shall  have  thirty  days’  notice,  after  which  time,  if  it  has  still 
failed  to  authorize  the  Secretary  of  State  as  required,  the  Attorney 
General  shall  proceed  to  wind  up  the  corporate  affairs  by  a decree  of 
court.  L.  1906,  Ch.  64,  pp.  41,  42. 

11.  Principal  Office. 

If  any  domestic  corporation  does  not  maintain  an  office  in  the 
State  it  shall  authorize  the  Secretary  of  State  to  receive  service  of 
summons  or  other  legal  process.  Failure  to  comply  with  this  require- 
ment renders  the  corporate  charter  liable  to  forfeiture  at  suit  of  Attor- 
ney General  of  State.  The  authorization  may  be  sent  to  Secretary  of 
State  by  registered  letter.  L.  1906,  Ch.  64,  pp.  41,  42. 

15.  Combinations  and  Monopolies. 

Discrimination  in  prices  of  petroleum  or  its  products  between 
different  sections  of  the  State,  by  selling  at  a lower  rate  in  one  section 
than  is  charged  by  same  party  in  another  section,  is  made  a crime, 
punishable  by  fine  or  imprisonment,  or  both.  L.  1906,  Ch.  169,  p.  119. 


IOWA. 


1.  Corporation  Laws.* 

Constitution.  (1857.)  No  corporation  shall  be  created  by  special 
law.  Art.  VIII,  § 1.  Nor  shall  the  State  become  a stockholder  in 
any  corporation  or  assume  the  liabilities  thereof.  Id.,  § 3.  The  prop- 
erty of  corporations  for  profit  shall  be  taxed  the  same  as  that  of 
individuals.  Id.,  § 2. 

Statutes.  The  general  corporation  law  is  found  in  Titles  IX,  of 
Annotated  Code  of  Iowa,  1897,  and  Supplement  thereto  of  1902,  with 
amendments  in  the  Laws  of  1904,  Chapters  55,  66.  Chapter  1,  Title 
IX  of  the  Code,  relates  to  corporations  for  pecuniary  profit,  the  re- 
maining chapters  referring  specially  to  agricultural,  insurance,  bank- 
ing, building  and  loan,  and  water  corporations.  Title  X refers  to 
telegraph  and  telephone  companies  and  railroads.  Corporations  may 
be  formed  under  the  general  law  for  any  lawful  business.  § 1607. 

2.  Taxes  and  Fees. 

Organization  Expenses.  A fee  of  $25  must  be  paid  to  Secretary 
of  State  before  issue  of  any  certificate  of  incorporation,  and,  in  addi- 
tion, on  stock  in  excess  of  $10,000,  a fee  of  $1  per  $1,000.  Farmers’ 
co-operative  creamery  associations  are  exempt,  also  beet  sugar  cor- 
porations. S.,  § 1610.  For  recording  and  transcripts,  10  cents  per 
hundred  words;  for  certificates,  25  cents;  for  affixing  seal,  35  cents. 
§ 1291. 

To  County  Recorder  for  recording  first  400  words,  50  cents;  10 
cents  per  folio  for  excess.  § 498.  For  publishing,  $1  per  ten  lines 
first  insertion,  50  cents  for  subsequent  insertions.  § 1293. 

Franchise  Tax.  None  prescribed. 

Local  Taxation.  Of  property  same  as  for  individuals.  Const., 
Art.  VIII,  § 2.  Property  used  in  manufacture  of  beet  sugar  is  exempt, 
including  realty  to  the  extent  of  ten  acres,  as  is  also  the  stock  of 
companies  engaged  in  said  business,  until  January  1st,  1910.  S., 
§ 1304a.  Surplus  capital  above  value  of  real  estate  is  taxed.  § 1323. 
(For  tax  returns,  see  § 13,  “Reports.”)  Bank  v.  Burlington,  61  N.  W. 
851.  Stock  of  mercantile  and  manufacturing  corporations  whose 
property  is  taxed  is  not  assessed  against  owners.  §§  1318,  1319. 

General.  To  Secretary  of  State:  On  increase  of  capital  stock, 
$1  for  each  $1,000  of  increase.  § 1610.  On  renewal  of  corporate  ex- 

* References,  except  as  otherwise  noted,  are  to  Annotated  Code,  1897,  an  S.  desig- 
nating amendments  in  1902  Supplement. 


135 


136 


CLASSIFIED  CORPORATION  LAWS. 


istence,  $25  and  $1  on  each  thousand  of  authorized  capital  above 
$10,000.  S.,  § 1618. 

Recording  amendments,  400  words  or  less,  50  cents;  each  addi- 
tional 100  words,  10  cents.  § 498.  Publication  of  same  for  first  in- 
sertion, $1  for  each  ten  lines;  subsequent  insertions,  50  cents.  § 1293. 

3.  Incorporation. 

Incorporators.  May  be  any  number.  § 1607.  A single  individual 
may  incorporate,  but  if  name  of  individual  or  individuals  are  adopted, 
the  word  “ Incorporated  ” must  be  added.  § 1608.  Failure  to  comply 
substantially  with  the  requirements  as  to  incorporation  render  the 
incorporators  individually  liable  for  the  corporate  debts.  § 1616. 

Articles  of  Incorporation.  Must  be  signed  and  acknowledged  by 
the  incorporators.  § 1610.  The  statutory  provisions  are  not  specific 
as  to  contents  of  these  articles.  A notice  of  incorporation  is,  how- 
ever, prescribed  in  detail,  and  in  practice  the  contents  of  this  notice 
and  the  articles  are  substantially  the  same.  The  notice  of  incorpora- 
tion must  contain  (§1613): 

(1)  Name  of  the  corporation.  No  restrictions,  except  that 
names  of  individuals  adopted  as  corporate  names  must  be 
followed  by  the  word,  “ Incorporated.”  § 1608. 

(2)  Principal  place  of  business.  Must  be  within  the  State 
if  business  is  to  be  transacted  in  Iowa.  § 1612. 

(3)  General  nature  of  the  business  to  be  transacted. 

(4)  Amount  of  capital  stock  authorized  and  the  times  and 
conditions  on  which  it  is  to  be  paid  in.  No  restrictions  as 
to  amount  or  par  value  of  shares. 

(5)  Time  of  commencement  and  termination  of  the  cor- 
poration. Of  ordinary  corporations  must  not  exceed  twenty 
years.  § 1618. 

(6)  By  what  officers  or  persons  its  affairs  are  to  be  con- 
ducted and  the  times  when  and  the  manner  in  which  they 
will  be  elected. 

(7)  Highest  amount  of  indebtedness  to  which  the  corpora- 
tion may  at  any  time  subject  itself. 

(8)  Whether  private  property  is  to  be  exempt  from  cor- 
porate debts.  § 1613. 

Filing  and  Recording.  The  articles  of  incorporation  are  recorded 
with  the  Recorder  of  Deeds  of  the  county  of  the  principal  place  of 
business  and  the  Recorder  must  within  five  days  thereafter  endorse 
on  the  articles  the  time  of  filing  and  the  book  and  page  of  record. 
The  articles,  so  endorsed,  are  then  filed  and  recorded  with  the  Secre- 
tary of  State,  who,  on  payment  of  the  prescribed  fees,  issues  certifi- 
cate of  incorporation.  §§  1610,  1614. 

Publication.  Within  three  months  from  the  date  the  articles  are 


IOWA. 


137 


filed  in  the  recorder’s  office,  the  notice  of  incorporation  must  be  pub- 
lished once  each  week  for  four  successive  weeks  in  a newspaper  as 
convenient  as  practicable  to  the  principal  place  of  business.  Affidavit 
of  such  publication  of  notice  must  be  made  by  the  publisher  of  such 
newspaper  and  must  be  filed  with  the  Secretary  of  State.  . §§  1613,  1614. 
Must  be  made  in  newspaper  which  has  widest  circulation.  Berkson 
Co.  v.  Anderson,  115  la.  674. 

4.  Organization. 

First  Meetings.  If  corporation  transacts  business  in  the  State 
the  first  meeting  of  stockholders  must  be  held  at  the  principal  office 
in  the  State  for  the  election  of  directors  or  officers,  as  specified  in 
the  articles  of  incorporation.  § 1612. 

By-Laws.  No  general  provisions.  May  be  adopted  by  directors, 
if  stockholders  consent.  Hygum  v.  Ins.  Co.,  11  la.  21,  26.  A copy 
of  the  by-laws  with  names  of  all  the  corporate  officers  must  be  posted 
in  the  principal  place  of  business  subject  to  public  inspection.  § 1&24. 

Certificates.  Affidavit  of  publication  of  notice  of  incorporation, 
made  by  the  publisher  of  the  newspaper  in  which  notice  appears,  must 
be  filed  with  Secretary  of  State.  § 1613. 

5 Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  of  incorporation 
(§  1614),  and  is  not  to  exceed  twenty  years.  § 1618.  It  continues  be- 
yond expiration  by  limitation  or  by  voluntary  dissolution  for  the  pur- 
pose of  settling  affairs.  § 1629. 

Beginning  Business.  Business  may  be  commenced  forthwith  on 
issuance  of  certificate  of  incorporation,  and  all  acts  are  valid  if  pub- 
lication of  notice  is  made  as  prescribed  within  three  months  from  the 
date  of  the  certificate.  § 1614.  Must  be  commenced  within  two  years. 
§ 1628. 

Renewal.  Corporate  existence  may  be  renewed  for  another  term 
of  twenty  years  or  less,  within  three  months  before  or  after  expira- 
tion of  first  term,  on  approval  of  majority  of  stockholders  at  a regu- 
lar meeting  or  special  meeting  called  for  that  purpose,  and  if  those 
in  favor  of  renewal  will  purchase  at  its  real  value  the  stock  of  any 
opposed  to  renewal.  Procedure  is  prescribed.  S.,  § 1618. 

It  has  been  judicially  decided  that  renewal  may  be  accomplished 
by  simple  amendment  to  articles. . Lamb  & Sons  v.  Dobson,  117  la. 
124;  90  N.  W.  607. 

Forfeiture  of  Charter.  Occurs  for  non-user  for  two  years  at  any 
one  time,  but  omission  to  elect  officers  or  hold  meetings  at  prescribed 
times  does  not  work  forfeiture  if  election  is  held  within  two  years 
after  time  appointed.  § 1628.  Intentional  wrong-doing  of  directors 
or  managing  officers  in  regard  to  corporate  acts,  dividends,  etc.,  may 
work  forfeiture  of  charter  by  decree  of  court.  § 1622.  On  sale  of 
franchise  under  execution,  purchaser  becomes  vested  with  corporate 
powers.  § 1634. 


138 


CLASSIFIED  CORPORATION  LAWS. 


Dissolution.  May  be  had  by  unanimous  consent  or  in  accordance 
with  the  provisions  of  the  articles,  and  notice  thereof  must  be  given 
as  on  incorporation.  § 1617;  Stewart  v.  Pierce,  116  la.  733. 


6.  Corporate  Powers. 

General.  The  ordinary  powers  are  enumerated,  also  the  right  to 
exempt  stockholders  from  any  personal  liability  for  corporate  debts, 
except  such  as  is  imposed  by  statute.  § 1609. 

To  Hold  Property.  This  power  is  conferred  to  the  same  extent 
as  exercised  by  natural  persons.  § 1609,  6. 

Its  Own  Stock.  Where  its  articles  authorize  a corpor- 
ation to  purchase  “any  real  estate  or  other  property,”  it  is  not  be- 
yond its  powers  to  purchase  its  own  stock.  Lumber  Co.  v.  Foster, 
49  la.  25. 

Stock  of  Other  Corporations.  Is  impliedly  permitted. 
§ 1626.  Is  recognized  by  the  courts.  Calumet  Paper  Co.  v.  Co.,  64 
N.  W.  782;  Stewart  v.  Pierce,  116  la.  733.  A corporation  which  ac- 
quires stock  in  another  corporation  can'  not  set  up  ultra  vires  when 
sued  as  a stockholder.  White  v.  Co.,  105  la.  145. 

To  Borrow  Money.  The  extent  of  this  power  must  be  defined 
and  limited  in  the  articles  of  incorporation,  and  must  in  no  case  ex- 
ceed two-thirds  of  the  capital  stock.  §§  1611,  1622.  Bonds  secured 
by  real  estate  are  exempt  from  this  provision  if  the  property  is  worth 
at  least  twice  as  much  as  the  amount  loaned  thereon.  § 1611. 

To  Do  Business  in  Other  States.  Is  impliedly  permitted.  § 1612. 

Consolidation  or  Merger.  Is  not  provided  for  as  to  business  cor- 
porations. 

Amendment  of  Charter.  May  be  made  at  any  annual  meeting  of 
the  stockholders  or  at  special  meeting  called  for  that  purpose,  to  be 
recorded,  approved  and  published  as  original  articles.  May  be  signed 
and  acknowledged  by  such  officers  as  stockholders  designate.  § 1615, 


7.  Capital  Stock. 

Amount.  No  limitations,  but  must  be  stated  in  articles  of  in- 
corporation. § 1613. 

Initial  Payment.  Not  prescribed. 

Consideration  for  Issue.  May  be  money  or  property,  the  terms 
and  conditions  on  which  it  will  be  issued  to  be  stated  in  the  articles 
of  incorporation  and  also  to  be  shown  on  the  face  of  the  certificates. 
§§  1613,  1627.  Where  property  is  received  by  a corporation  at  a 
speculative  and  excessive  valuation  in  payment  for  its  stock,  it  is 
only  a payment  to  the  extent  of  the  property  received,  and  the  owner 
of  such  stock  is  liable  to  the  creditors  for  the  difference  between  the 
true  value  of  the  property  and  the  face  value  of  the  stock.  State  Tr. 
Co.  v.  Turner,  111  la.  664;  Stout  v.  Hubbell,  104  la.  499. 


IOWA. 


139 


Increase  or  Decrease.  To  be  accomplished  in  the  same  manner 
as  any  amendment  of  the  articles,  there  being  a provision  for  payment 
of  fees  on  increase  but  no  regulations  requiring  special  procedure. 
§ 1610. 

Classes  of  Stock.  No  provision. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Must  show  on  their  face  the  amount  paid 
thereon,  and  whether  such  payment  was  made  in  cash  or  in  property. 
§ 1627. 

Transfer  of  Stock.  Is  not  valid  unless  entered  on  the  books  of 
the  company,  showing  the  name  of  the  person  by  and  to  whom  trans- 
ferred, date  of  transfer  and  number  or  other  designation  of  shares. 
When  transferred  as  collateral  security,  notice  to  the  secretary  of 
the  corporation  is  sufficient  without  entry  on  the  books,  but  the 
secretary  must  keep  a record  of  the  same.  § 1626. 


8.  Stockholders. 

Rights  and  Powers.  They  control  all  amendments.  § 1615. 
They  have  full  right  to  examination  of  corporate  books.  §§  1624,  1626; 
Ellsworth  v.  Dorwart,  63  N.  W.  588. 

Liability.  Stockholders  may  not  in  any  way  be  exempted  from 
liability  for  unpaid  instalments  on  their  stock  and  execution  against 
the  corporation  returned  unsatisfied  may  be  levied  on  their  property 
to  that  extent.  § 1631.  Stockholder  paying  may  maintain  action 
against  corporation  for  indemnity  and  against  the  other  stockholders 
for  contribution.  § 1633;  Esgen  v.  Smith,  113  la.  25;  State  Tr.  Co.  v. 
Turner,  111  la.  664.  Failure  to  comply  with  the  requirements  for 
incorporation  renders  stockholders  liable  for  the  corporate  debts. 
§ 1616.  For  illegal  dividends  or  distribution  of  capital,  they  are  liable 
to  the  respective  amounts  received.  § 1621. 

Meetings.  Must  be  held  within  the  State.  The  time  for  holding 
annual  meetings  for  election  of  directors  and  officers  is  to  be  stated 
in  the  articles  of  incorporation;  and  inasmuch  as  there  is  a statement 
to  be  filed  with  the  Secretary  of  State  in  January  of  each  year,  show- 
ing their  names,  the  election  is  reasonably  fixed  accordingly. 

Voting.  To  be  prescribed  by  the  by-laws,  the  statute  containing 
no  provisions.  No  statutory  provisions  as  to  voting  by  proxy  or  as 
to  what  constitutes  a quorum.  These  matters  should  therefore  be 
regulated  by  the  by-laws. 

9.  Directors. 

General.  Their  names  are  reported  annually  to  the  Secretary  of 
State.  § 1612.  A provision  in  the  by-laws  that  the  directors  shall 
fix  compensation  of  officers,  does  not  authorize  them  to  vote  com- 
pensation to  themselves.  Schoening  v.  Schwenck,  112  la.  733. 


140 


CLASSIFIED  CORPORATION  LAWS. 


Number.  No  limitations  as  to  number,  but  it  is  to  be  stated  in 
the  articles  of  incorporation. 

Qualifications.  No  statutory  provisions. 

Powers.  They  may  make  by-laws  if  authorized  thereto  by  stock- 
holders. Hygum  v.  Co.,  II  la.  26. 

Liability.  Intentional  fraud  in  failing  to  comply  with  the  articles 
of  incorporation  is  a misdemeanor,  punishable  by  fine  and  imprison- 
ment. Persons  injured  may  also  recover  damages  from  those  guilty. 
§ 1620.  Diversion  of  funds  to  other  objects  than  those  named  in  the 
articles,  to  any  one’s  injury,  is  declared  fraud  and  within  the  provi- 
sions of  § 1620,  and  improper  payments  of  dividends  render  the  con- 
senting officers  and  directors  jointly  and  severally  liable  for  existing 
corporate  debts.  § 1621.  Permitting  corporate  debts  to  exceed  the 
limit  prescribed  by  law  renders  them  jointly  and  severally  liable  for 
the  excess.  § 1622. 

Meetings.  Are  regulated  entirely  by  the  by-laws.  A majority 
is  a quorum.  Buell  v.  Buckingham,  16  la.  284. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  The  officers  are  to  be  designated  in  the  articles  of  in- 
corporation. § 1613.  Their  names  are  reported  annually  to  the 
Secretary  of  State.  § 1612. 

Liability.  (See  §9,  “Directors.”)  Keeping  false  accounts  is 
made  a misdemeanor.  § 1623.  For  issuing  stock  certificates  without 
showing  thereon  amount  paid  and  how  paid,  they  are  liable  in  fine 
of  $100  to  $500.  § 1627. 

n.  Principal  Office. 

If  the  corporation  transacts  business  in  the  State  of  Iowa^  the 
articles  of  incorporation  must  fix  its  principal  place  of  business,  which 
must  be  within  the  State,  in  charge  of  an  agent.  It  may  be  changed 
by  a vote  of  the  stockholders  and  any  change  must  be  reported  to 
the  Secretary  of  State.  § 1612.  By-laws  and  names  of  all  officers 
must  be  posted  in  the  principal  places  of  business  subject  to  public 
inspection.  § 1624.  Also  statement  of  stock  and  indebtedness.  § 1625. 

12.  Corporate  Books. 

What  Required.  Stock  and  transfer  books  are  prescribed. 
§§  1612,  1626.  Stock  book  must  show  original  stockholders,  their 
interests,  amount  paid  on  their  shares  and  all  transfers  thereof. 
| 1626.  Keeping  false  books  is  made  misdemeanor.  § 1623. 

Where  Kept.  If  the  corporation  does  business  in  the  State  of 
Iowa,  then  at  the  principal  office  in  that  State.  § 1612. 


IOWA. 


141 

Examination  of.  By-laws  and  names  of  all  officers,  and  statement 
of  capital  stock  subscribed,  amount  actually  paid  in,  and  amount  of 
indebtedness,  in  a general  way  must  be  posted  in  the  principal  places 
of  business  subject  to  public  inspection.  §§1624,  1625.  The  stock 
book  as  to  the  prescribed  items  is  subject  to  inspection  of  the  public. 
§ 1626;  Boardman  v.  Co.,  75  N.  W.  343. 

13.  Reports. 

In  January  of  every  year,  the  corporation  must  file  with  the 
Secretary  of  State  a list  of  its  officers  and  directors  and  any  change 
of  location  of  place  of  business.  § 1612. 

Every  corporation  for  profit  must  annually  on  or  before  January 
25th  furnish  to  the  assessor  of  the  district  in  which  its  principal  office 
is  located,  a's  of  January  1st,  a statement  showing  specifically  (§  1323): 
(1)  Total  authorized  capital  stock  and  number  of  shares.  (2)  Num- 
ber of  shares  issued  and  par  value  thereof.  (3)  Amount  paid  on  each 
share  and  total  capital  paid  in.  (4)  Description  and  value  of  each 
tract  of  real  estate  owned  by  it.  (5)  Date,  rate  per  cent,  and  amount 
of  each  dividend  declared  and  the  amount  of  capital  on  which  each 
such  dividend  was  declared.  (6)  Gross  and  net  earnings,  respectively, 
during  the  year  and  the  amount  of  surplus.  (7)  Amount  of  profit 
added  to  sinking  fund.  (8)  Highest  price  of  sales  of  stock  between 
the  first  and  tenth  days  of  January  of  the  current  year.  (9)  Highest 
price  of  sales  of  stock  during  the  preceding  year  and  average  price 
of  such  sales. 

Publication  is  required  for  four  weeks  of  notice  of  original  in- 
corporation, containing  all  the  facts  as  to  the  incorporation  (§  1613) 
and  of  every  subsequent  change  or  amendment. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  except 
mercantile  or  manufacturing,  before  doing  business  in  the  State,  must 
file  with  the  Secretary  of  State  a duly  attested  and  certified  copy  of 
their  articles  of  incorporation,  accompanied  by  a resolution  of  direc- 
tors or  stockholders,  authorizing  the  filing  thereof,  and  also  authoriz- 
ing service  of  process  to  be  made  on  any  of  its  officers  or  agents  in 
the  State,  and  requesting  the  issuance  of  a permit  to  transact  business 
in  the  State,  said  application  to  contain  a statement  that  such  permit 
shall  be  subject  to  the  provisions  of  the  domestic  corporation  laws. 
The  same  fees  are  required  to  be  paid  as  of  domestic  corporations; 
also  on  increase  of  stock.  The  Secretary  of  State  thereupon  issues 
permit.  § 1637.  They  can  hold  real  estate  for  ten  years  only.  § 1641; 
S.,  §§  288ga-c,  2890. 

Penalties  for  Non-Compliance.  Fine  of  $100  for  every  day  the 
corporation  does  business  without  obtaining  such  permit,  and  officers 
and  agents  are  guilty  of  a misdemeanor,  punishable  by  fine  not  to 
exceed  $100  and  imprisonment  not  to  exceed  thirty  days.  § 1639. 

Taxation.  No  special  provisions. 

Books.  Same  as  of  domestic  corporations.  §§  1637,  1639. 


142 


CLASSIFIED  CORPORATION  LAWS. 


(Iowa) 

Reports.  Same  as  of  domestic  corporations  (§§  1637,  1639),  ex- 
cept as  to  the  tax  return.  § 1323. 

Attachments  Against.  Lie  on  the  ground  of  being  a foreign  cor- 
poration. § 3878. 

15.  Combinations  and  Monopolies. 

Blacklisting  employees  is  punishable  by  fine  from  $100  to  $500, 
and  offender  is  also  liable  in  damages  to  the  person  injured.  § 5027. 
Pools,  trusts  and  combinations  to  fix  prices  are  declared  conspiracies, 
and  are  punishable  by  fine  of  not  less  than  one  per  cent,  of  capital 
or  amount  invested  in  such  corporation,  nor  more  than  twenty  per 
cent.,  and  the  individual  offenders  are  fined  from  $500  to  $5,000  or 
are  liable  to  imprisonment  for  one  year,  or  both.  §§  5060-5062.  The 
corporate  rights  and  franchises  are  also  forfeited  after  thirty  days’ 
notice  from  Secretary  of  State.  §§  5065,  50 66.  The  State  and  County 
Attorneys  participate  in  any  fines  recovered.  § 5067. 


KANSAS. 

Enactments  of  1906. 


1.  Corporation  Laws. 

Constitution.*  (1906)  An  amendment  of  Section  2,  Art.  XII,  of 
the  Constitution  of  1859,  provides  that  dues  from  corporations  shall 
be  secured  by  the  individual  liability  of  stockholders  to  the  amount  of 
stock  owned  by  each.  This  amendment  modifies  the  former  provision 
under  which  stockholders  were  liable  to  an  additional  amount  equal  to 
the  stock  owned  by  each.  The  amendment  was  proposed  in  1905 
(Chapter  542  of  the  Laws  of  1905)  and  was-affirmatively  carried  at  the 
general  election  of  1906.  Its  effect  is  to  eliminate  the  so-called  double 
liability  of  Kansas  stockholders  for  corporate  debts. 

8.  Stockholders. 

Liability.  Under  the  constitutional  amendment  to  Section  2,  Art. 
XII,  of  the  State  Constitution  which  was  adopted  at  the  general  elec- 
tion of  1906,  a stockholder  of  a Kansas  corporation  is  now  liable  for 
corporate  debts  to  whatever  amount  remains  unpaid  on  his  stock,  but 
no  further.  This  is  the  ordinary  liability  that  obtains  in  most  states 
of  the  Union. 


Constitutional  Amendment. 





KANSAS. 


i.  Corporation  Laws.* 

Constitution.  (1859.)  The  legislature  shall  pass  no  special  act 
conferring  corporate  powers.  Art.  XII,  § 1.  Dues  are  secured  by 
individual  liability  of  stockholders  to  an  additional  amount  equal  to 
stock  owned.  Id.,  § 2.  (But  see  L.  1905,  Ch.  542,  proposing  amend- 
ment to  change  this  unusual  liability.) 

Statutes.  The  general  corporation  law  is  contained  in  Chapter 
23,  Arts.  1-5,  §§  1245-1315,  of  the  General  Statutes  of  Kansas  (1901), 
as  amended  by  L.  1903,  Chs.  151-153  and  L.  1905,  Chs.  I55-I59-  Arts. 
6-20,  22,  §§  1316-1460,  1466-1482,  of  the  General  Statutes  refer  specially 
to  railway,  road,  telegraph,  educational,  religious,  etc.,  cemetery, 
banking,  trust,  building  and  loan,  warehouse,  etc.,  bridge,  navigation, 
sewer,  express  and  co-operative  corporations.  Foreign  corporations 
are  provided  for  by  Art.  21,  §§  1461-1465. 

Under  the  general  act  corporations  may  be  formed  for  forty 
enumerated  purposes  and  for  any  manufacturing,  mining,  mechanical, 
chemical  or  mercantile  and  agricultural  implements  and  produce  busi- 
ness, separately  or  all  combined.  §§  1249,  1250. 


2.  Taxes  and  Fees. 

Organization  Expenses.  Fee  of  $25  must  accompany  application 
to  Charter  Board  for  permission  to  organize.  § 1261.  Charter  fee  to 
State  Treasurer  before  filing  charter  with  Secretary  of  State:  One- 
tenth  of  one  per  cent,  on  authorized  capital  up  to  $100,000;  on  the 
next  $400,000  or  part  thereof,  one-twentieth  of  one  per  cent.;  for  each 
million  or  major  part  thereof  above  $500,000,  $200.  To  Secretary  of 
State:  For  filing  and  recording  charter  not  exceeding  ten  folios, 

$2.50;  for  each  folio  in  excess,  25  cents.  Recording  fee  entitles  cor- 
poration to  a certified  copy  of  charter.  § 1264. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Personal  property  is  listed  and  valued  as  of 
March  1st.  Paid  up  capital  is  listed  by  the  company,  except  manu- 
facturing and  stock  yard  companies,  and  taxed  on  surplus  value  above 
real  and  personal  property  taxed  in  State.  §§  7514,  7515.  Special  re- 
turns are  prescribed  for  merchants  and  manufacturers.  §§  7541-7546. 

* Except  as  otherwise  noted,  references  are  to  sections  of  the  General  Statutes 
(1901). 


143 


144 


CLASSIFIED  CORPORATION  LAWS. 


General.  To  Secretary  of  State:  For  filing  and  recording  amend- 
ments, $2.50  for  first  10  folios  and  25  cents  for  each  folio  in  excess. 
§ 1264.  On  renewal  the  same  fees  are  paid  as  on  incorporation. 
§ 1264.  On  increase  of  capital  stock,  the  same  charter  fees  are  paid  on 
the  increase  as  on  the  original  capitalization.  For  filing  and  recording 
certificate  of  renewal  or  increase,  $2.50;  for  certified  copy  thereof, 
$2.50.  § 1265.  Same  filing  and  recording  fees  on  decrease  of  capital 
stock.  L.  1903,  Ch.  151.  On  consolidation  the  regular  fee  is  paid 
on  any  increase  of  stock  beyond  the  aggregate  stock  of  the  constit- 
uent companies.  § 1266.  For  annual  report  and  certificate  of  filing, 
$1.  § 1283. 


3.  Incorporation. 

Incorporators.  Must  be  five  or  more.  § 1248.  Three  must  be 
citizens  of  the  State.  § 1256. 

Formation. 

1.  Application  for  Charter.  An  application  must  be  pre- 
pared on  blanks  furnished  by  the  Secretary  of  State,  and  verified 
by  the  persons  wishing  to  incorporate,  setting  forth  (§  1260) : 

(1)  The  name  desired.  (2)  Location  of  proposed  principal  office 
or  place  of  business.  (3)  Period  of  existence.  (4)  Full  nature 
and  character  of  the  business  in  which  it  proposes  to  engage. 
(5)  Names  and  addresses  of  the  proposed  incorporators.  (6) 
Proposed  amount  of  capital  stock.  § 1260. 

This  application,  together  with  the  required  fee  of  $25,  is 
presented  to  the  Charter  Board,  composed  of  the  Attorney  Gen- 
eral, Secretary  of  State,  and  the  State  Bank  Commissioner. 
§ 1259.  It  is  the  duty  of  the  Board  to  investigate  and  act  upon 
the  application.  If  it  meets  with  the  approval  of  the  Board,  the 
Secretary  of  State,  who  is  secretary  of  the  Board,  issues  a certifi- 
cate of  authority.  §1263.  This  certificate  authorizes  the  appli- 
cants to  proceed  with  the  desired  incorporation. 

2.  Charter.  A charter  must  then  be  subscribed  and  acknowl- 
edged by  the  incorporators  (§  1256),  setting  forth  (§  1253): 

(1)  Name  of  the  corporation.  Must  begin  with  “the”  and 
end  with  “ corporation,”  “ company,”  “ association,”  or  “ so- 
ciety,” and  indicate  nature  of  the  business.  § 1254. 

(2)  Purposes  for  which  it  is  formed.  Combinations  of 
manufacturing,  mining,  mechanical,  chemical,  or  mercantile, 
and  agricultural  implements  and  produce  businesses  are  al- 
lowed. § 1250. 

(3)  Place  or  places  where  its  business  is  to  be  transacted. 
An  office  must  be  maintained  in  the  State.  § 1293. 

(4)  Term  for  which  it  is  to  exist.  May  be  for  any  period 
but  unless  specified  in  charter  is  limited  to  twenty  years. 
§ 1269. 


KANSAS. 


MS 


(5)  Number  of  directors  or  trustees,  and  names  and  resi- 
dences of  those  appointed  for  the  first  year.  Must  be  not 
less  than  three  nor  more  than  twenty-four.  § 1269. 

(6)  Amount  of  capital  stock  and  number  of  shares.  No 
restrictions  as  to  either. 

(7)  Names  and  addresses  of  the  stockholders  and  the  num- 
ber of  shares  held  by  each. 

3.  Filing  and  Recording.  Before  the  charter  may  be  filed, 
the  prescribed  fees  must  be  paid  to  State  Treasurer.  § 1264.  His 
receipt  is  endorsed  on  the  charter,  and  the  instrument  is  filed 
and  recorded  with  the  Secretary  of  State,  who,  upon  payment  of 
filing  and  recording  fees,  issues  a certified  copy  of  the  charter, 
retaining  the  original  on  file.  §§  1257,  1264. 

4.  Organization. 

First  Meetings.  No  provisions  as  to  first  meeting  of  stockholders. 
The  directors  are  named  in  the  charter,  and  as  the  by-laws  are  to  be 
adopted  by  them,  the  only  organization  meeting  required  is  that  of 
the  directors  for  adoption  of  by-laws  and  election  of  officers. 

If  the  full  amount  of  the  capital  stock  has  not  been  subscribed, 
the  directors  named  in  the  charter  or  a majority  of  them  must,  with- 
in three  months  after  the  filing  of  the  charter,  open  subscription  books 
at  such  time  and  place  as  they  may  determine,  after  at  least  thirty 
days’  notice  in  a newspaper  published  or  circulated  in  one  or  more 
counties  in  which  such  books  are  opened,  and  such  books  must  be 
kept  open  until  the  whole  amount  is  subscribed.  § 1275. 

By-Laws.  Are  adopted  by  the  directors  for  the  management  of 
the  property  of  the  corporation,  the  regulation  of  its  affairs  and  for 
the  transfer  of  its  stock  (§  1269),  but  may  be  amended  by  the  stock- 
holders at  a meeting  ordered  for  that  purpose  by  the  directors  on  the 
written  application  of  a majority  of  the  stockholders.  § 1278. 

Certificates.  Before  beginning  business  an  affidavit  must  be  made 
by  the  president  and  secretary  of  the  corporation  to  the  Secretary  of 
State,  setting  forth  that  not  less  than  twenty  per  cent,  of  its  authorized 
capital  has  been  paid  in  actual  cash.  § 1311. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  of  charter.  § 1258.  May  be  for 
any  desired  period,  but  if  no  duration  is  named  in  charter,  is  twenty 
years.  § 1269.  Can  not  be  collaterally  attacked.  C.  K.  & W.  Co.  v. 
Comrs.,  36  Kan.  122  (1887). 

Beginning  Business.  May  be  commenced  on  proof  of  payment 
of  20  per  cent,  of  capital  stock  in  cash.  Must  be  begun  within  one 
year  after  filing  charter.  § 1311. 

Renewal.  Corporate  existence  may  be  extended  at  any  time  for 
successive  periods  of  twenty  years,  or  such  length  of  time  as  may 
be  provided  therefor  in  the  certificate,  such  extension  to  be  authorized 


CLASSIFIED  CORPORATION  LAWS. 


I46 


by  the  board  of  directors,  and  approved  by  two-thirds  of  the  stock- 
holders, such  approval  to  be  expressed  either  at  a duly  called  meet- 
ing held  for  the  purpose,  or  by  written  consent.  After  such  action,  a 
certificate  of  the  intention  to  so  renew  must  be  signed  and  acknowl- 
edged by  the  president  and  secretary  and  be  filed  with  the  Secretary 
of  State.  §§  1269,  1284. 

Forfeiture  of  Charter.  Occurs  by  mere  publication  by  Secretary 
of  State,  on  failure  to  commence  active  operations  under  charter  for 
one  year  after  filing  the  same.  § 1311.  Also  by  declaration  of  the 
Charter  Board,  published  in  the  official  State  paper,  on  failure  to  file 
annual  report  within  ninety  days  from  August  1st.  Attorney  General 
applies  for  receiver.  § 1283.  On  any  such  failure  and  on  failure  to 
file  certificates  of  transfers  of  stock  (See  under  § 7,  “Transfer  of 
Stock”),  action  can  not  be  maintained  or  recovery  had  in  any  of  the 
State  courts.  Id.  Suspension  of  business  for  more  than  one  year 
(§  1310),  or  failure  for  six  months  to  keep  general  office  in  State  or 
to  have  three  directors  citizens  and  residents,  is  ground  for  forfei- 
ture. §§  1293,  1294.  Also  forfeiture  occurs  011  violation  of  anti-trust 
law  (§  7866)  or  of  law  against  trade  discriminations.  L.  1905,  Ch.  2, 
§ 3- 

Dissolution.  Voluntary  dissolution  is  not  provided  for,  except  by 
judgment  of  court  of  competent  jurisdiction.  But  for  the  purpose  of 
enabling  a creditor  to  proceed  against  the  stockholders  to  enforce 
their  individual  liability,  it  is  sufficient  to  show  that  the  corporation 
has  suspended  business  for  more  than  one  year.  § 1310. 

6.  Corporate  Powers. 

General.  The  ordinary  powers  are  enumerated.  § 1269.  No 
corporation  shall  employ  its  stock  or  assets,  directly  or  indirectly, 
for  any  other  purpose  whatsoever  than  to  accomplish  the  legitimate 
objects  of  its  creation.  § 1285. 

To  Hold  Property.  This  power  is  limited  to  that  necessary  for 
corporate  purposes  or  acquired  in  payment  of  debts.  § 1269. 

Its  Own  Stock.  Stock  of  Other  Corporations.  No 

statutory  provisions. 

To  Borrow  Money.  Corporations  have  power  to  borrow  money, 
the  amount  thereof  not  to  exceed  amount  of  capital  stock.  § 1274. 

To  Do  Business  in  Other  States.  No  specific  provisions.  A cor- 
poration, however,  has  the  capacity  to  carry  on  business  in  other 
states  and  countries  so  long  as  it  does  not  depart  from  the  terms  of 
its  charter.  A.  T.  & S.  F.  Ry.  Co.  v.  Fletcher,  35  Kan.  236  (1886). 
But  three  directors  must  be  residents  and  citizens  and  all  books  and 
records  must  be  kept  in  general  office  in  State.  § 1293.  And  the 
treasurer’s  office  and  all  his  books  and  the  corporate  funds  must  be 
within  the  State.  §§  1293,  1306. 

Consolidation  or  Merger.  No  express  provisions  for  consolida- 
tion of  general  corporations,  but  it  is  impliedly  permitted  in  the  pro- 
vision that  charter  fee  is  to  be  paid  on  excess  of  capital  stock  of  the 
consolidated  company  over  the  aggregate  stock  of  the  constituent 
companies.  § 1266. 


KANSAS. 


147 


Amendment  of  Charter.  Amendments  must  be  authorized  by  a 
two-thirds  vote  of  the  stockholders  at  a meeting  held  in  conformity 
with  the  by-laws,  and  the  charter  as  amended  must  be  subscribed  by 
the  directors  and  acknowledged  by  not  less  than  three  thereof,  who 
must  be  citizens  of  the  State,  and  is  then  filed  and  recorded  as  was 
the  original  charter.  § 1254.  Name  may  be  changed  by  such  vote  of 
the  stockholders  as  by-laws  direct,  an  affidavit  to  be  filed  by  the 
president  and  secretary  with  the  Secretary  of  State,  setting  forth  the 
name  adopted  and  the  date  of  the  vote,  and  notice  of  such  change  to 
be  published  six  weeks  in  a newspaper  of  general  circulation  in  the 
county  of  location.  §§  1269-1 272. 

7.  Capital  Stock. 

Amount.  Not  prescribed.  Must  be  stated  in  charter  and  in  ap- 
plication therefor.  §§  1253,  1260. 

Initial  Payment.  Twenty  per  cent,  of  the  authorized  capital  stock 
must  be  paid  in  cash.  § 1311. 

Consideration  for  Issue.  Where  property  is  conveyed  to  a cor- 
poration in  payment  for  its  stock  and  the  transaction  is  made  a 
matter  of  record,  and  subsequently  approved  and  ratified  by  all  the 
officers  and  stockholders,  such  shares  will,  in  the  absence  of  fraud, 
be  treated  as  fully  paid.  Walburn  v.  Chenault,  43  Kan.  352  (1894). 

Directors  may  require  payment  of  subscriptions  in  such  man- 
ner and  instalments  as  the  by-laws  provide.  § 1289.  For  non-payment, 
stock  may  be  forfeited  on  thirty  days’  notice  to  the  delinquent  stock- 
holders, served  personally  or  by  mail.  § 1290. 

Increase  or  Decrease.  Capital  stock  may  be  increased  not  ex- 
ceeding three  times  the  amount  of  its  authorized  capital,  by  a vote 
of  the  stockholders  in  conformity  with  the  by-laws;  or  it  may  be 
increased  to  any  amount  by  a like  vote,  by  an  actual  bona  fide  paid  up 
cash  subscription  to  the  amount  of  such  increase.  After  increase  is 
made  it  is  certified  to  the  Secretary  of  State  by  the  directors  with 
date  and  amount.  The  certificate  must  be  filed  and  recorded  in  the 
same  manner  as  the  charter.  § 1273. 

Capital  stock  may  be  decreased  by  two-thirds  vote  of  outstanding 
stock  or  of  each  class  of  stock  at  a meeting  called  for  that  purpose, 
on  ten  days’  notice,  if  not  otherwise  provided  by  the  by-laws.  A 
certificate  of  decrease  must  be  executed,  filed  and  recorded  in  the 
same  manner  as  original  charter,  and  published  once  each  week  for 
three  successive  weeks  in  newspaper  published  in  the  county  where 
the  principal  place  of  business  is  located.  L.  1903,  Ch.  151. 

Classes  of  Stock.  Preferred  stock  may  be  issued  by  unanimous 
consent  of  stockholders.  § 1287. 

Par  Value  of  Shares.  Not  prescribed.  The  number  of  shares  is 
stated  in  charter  (§  1253),  and  may  be  changed  by  regular  amend- 
ment. § 1254. 

Stock  Certificates.  Form  and  signatures  not  prescribed. 

Transfer  of  Stock.  As  soon  as  made  on  the  books  of  the  com- 


t48 


CLASSIFIED  CORPORATION  LAWS. 


pany,  report  thereof  must  be  filed  with  Secretary  of  State,  showing 
name  and  address  of  transferee,  number  of  shares  transferred,  par 
value,  and  amount  paid  on  such  stock.  § 1283.  No  stock  may  be 
transferred  until  all  previous  assessments  thereon  have  been  fully 
paid.  § 1286;  Plumb  v.  Bank,  48  Kan.  484  (1892). 

8.  Stockholders. 

Rights  and  Powers.  They  control  amendments  of  charter,  re- 
newal of  the  corporate  existence,  etc.,  by  a two-thirds  vote.  §§  1254, 
1284.  They  may  amend  by-laws  but  only  at  a meeting  ordered  by  the 
directors  on  application  of  the  stockholders.  § 1278. 

Liability.  They  are  liable  for  unpaid  subscriptions  and  for  an 
additional  amount  equal  to  their  stock.  Const.,  Art.  XII,  § 2.  On 
reducing  stock  without  prescribed  publication,  stockholders  are  liable 
to  the  amount  thereof  received  by  each.  L.  1903,  Ch.  151.  Records  of 
Secretary  of  State  (See  “Transfer  of  Stock,”  under  § 7,  and  “Annual 
Report,”  under  § 13)  are  prima  facie  evidence  of  stockholders  and  their 
holdings,  etc.  § 1283;  Merrill  v.  Prescott,  67  Kan.  767  (1903). 

Meetings.  For  election  of  directors,  must  be  held  annually,  at 
time  and  place  prescribed  by  by-laws  (§  1276),  but  all  stockholders’ 
meetings  must  be  held  within  the  State.  Land  Grant  Ry.  Co.  v.  Co., 
6 Kan.  245,  253  (1870). 

Notice  and  Quorum.  No  provisions.  May  be  prescribed  by  by- 
laws. 

Voting.  To  protect  minority  stockholders,  subscribers  may  in- 
sert in  charter  a provision  that  no  stockholder  may  vote  or  own 
more  than  a certain  stated  minority  per  cent,  of  the  stock.  L.  1905, 
Ch.  157.  Stock  to  be  voted  must  have  stood  in  the  name  of  the  voter 
on  the  books  of  the  company  thirty  days  before  the  election.  § 1286. 
Cumulative  voting  is  prescribed.  § 1288. 

Proxies.  Voting  by  proxy  is  permitted.  §§  1248,  1288. 

Co-operative  societies  may  be  formed  in  which  each  stockholder 
may  have  but  one  vote.  § 1456. 

9.  Directors. 

Number.  The  directors  must  be  not  less  than  three  nor  more 
than  twenty-four.  § 1269.  Their  number  must  be  stated  in  the 
charter.  § 1253.  It  may  be  changed  by  vote  of  the  stockholders  cast 
as  the  by-laws  direct  (§  1269),  an  affidavit  thereof  to  be  filed  with 
the  Secretary  of  State  by  the  president  and  secretary,  stating  the 
number  fixed,  together  with  the  date  of  the  vote.  §§  1271,  1279. 

Qualifications.  At  least  three  must  be  citizens  and  residents  of 
the  State.  §§  1254,  1293.  They  must  all  be  stockholders  (§  1276)  and 
must  take  oath  of  office.  § 1277. 

Powers.  They  are  trustees  on  dissolution.  § 1312.  They  adopt 
by-laws  subject  to  ultimate  control  of  stockholders.  § 1278.  They 
fill  vacancies  on  the  board.  § 1276. 

Liability.  On  reduction  of  stock  without  legal  publication,  they 


KANSAS. 


149 


become  jointly  and  severally  liable  for  all  the  corporate  debts  con- 
tracted after  the  filing  of  certificate  of  decrease,  and  until  such  pub- 
lication. L.  1903,  Ch.  151.  For  knowingly  declaring  and  paying  divi- 
dend when  the  corporation  is  insolvent  or  which  would  render  it  in- 
solvent, they  are  jointly  and  severally  liable  to  the  extent  of  such 
dividend  for  corporate  debts  then  existing  or  contracted  while  they 
remain  in  office.  Directors  absent  or  objecting  in  writing  are  ex- 
empt. § 1292. 

Meetings.  Are  to  be  regulated  by  the  by-laws.  May  be  held 
without  the  State  if  so  provided  in  by-laws.  A majority  constitutes  a 
quorum.  § 1276. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  A president,  who  must  be  a director,  and  a secretary 
and  treasurer  are  prescribed.  § 1277.  Managing  officers  and  secretary 
must  keep  their  books  at  the  general  office  of  the  company  in  the 
State.  § 1293.  The  treasurer’s  office,  his  books  and  the  corporate 
funds  may  be  kept  within  the  State.  § 1306. 

Officers  are  subject  to  fines  and  imprisonment  for  violations  of 
anti-trust  law.  §§  24 32,  7868-7872. 

11.  Principal  Office. 

Must  be  maintained  in  the  State  (§  1293)  and  be  stated  in  the 
charter  and  application  therefor.  §§  1253,  1260.  May  be  changed  by 
regular  amendment.  § 1254.  The  treasurer’s  office  and  all  funds  must 
be  kept  in  the  State.  § 1306. 

12.  Corporate  Books. 

What  Required.  Stock  subscription  books  are  prescribed  by 
statute  (§  1275),  and  also  a record  of  all  stock  subscribed  and  trans- 
ferred. § 1282. 

Where  Kept.  All  books  of  account,  records,  etc.,  must  be  kept 
at  the  general  office  in  the  State.  § 1293. 

Examination  of.  The  books  and  records  are  to  be  at  all  reason- 
able times  open  to  the  inspection  of  stockholders.  The  directors  are 
charged  with  this  duty  and  may  also  be  required  by  one-third  of  the 
stockholders  to  present  reports  in  writing  of  the  situation  and  amount 
of  the  corporate  business.  § 1282. 

13.  Reports. 

On  or  before  August  1st  of  each  year,  the  president  and  secre- 
tary or  managing  officer  of  every  business  corporation  must  file  with 
the  Secretary  of  State,  on  blanks  furnished  by  him,  a detailed  state- 
ment of  the  condition  of  the  corporation  on  June  30th  next  preced- 


150 


CLASSIFIED  CORPORATION  LAWS. 


ing,  to  contain:  (i)  Authorized  capital  stock.  (2)  Paid  up  capital 

stock.  (3)  Par  value  and  market  value  per  share.  (4)  Complete  and 
detailed  statement  of  the  assets  and  liabilities.  (5)  A full  and  com- 
plete list  of  the  stockholders,  with  their  post-office  addresses  and  the 
number  of  shares  held  and  paid  for  by  each.  (6)  The  names  and 
post-office  addresses  of  the  officers,  trustees  or  directors  and  manager 
elected  for  the  ensuing  year,  together  with  a certificate  of  the  time 
and  manner  in  which  such  election  was  held.  Secretary  of  State 
may  require  supplementary  report.  § 1283.  He  issues  certificate  of 
filing.  Id. 

Publication  for  six  weeks  is  required  of  notice  of  change  of  name. 
§ 1272.  Of  notice  of  opening  subscription  books.  § 1275.  Certifi- 
cate of  reduction  of  capital  stock  is  published  three  weeks.  L.  1903, 
Ch.  151. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Before  doing  business  in  the 
State  a foreign  corporation  must  make  application  to  the  Charter 
Board,  on  blanks  furnished  by  the  Secretary  of  State,  subscribed  and 
sworn  to  by  the  president  and  secretary  or  other  managing  officers, 
containing:  (1)  Certified  copy  of  its  charter.  (2)  Place  of  its  prin- 

cipal office  or  place  of  business.  (3)  Full  nature  and  character  of 
the  business  in  which  it  proposes  to  engage.  (4)  Names  and  ad- 
dresses of  the  officers,  trustees  or  directors  and  stockholders.  (5) 
Detailed  statement  of  assets  and  liabilities,  and  any  other  informa- 
tion that  the  Board  may  require  in  order  to  determine  the  solvency 
of  the  corporation.  § 1260.  Fee  of  $25  must  accompany  application. 
§ 1261.  Fees  on  capital  stock  are  the  same  as  of  domestic  corpora- 
tions. § 1264. 

It  must  further  file  in  the  office  of  the  Secretary  of  State  its  writ- 
ten consent  to  being  sued  in  the  State  by  service  on  the  Secretary  of 
State,  and  a certified  copy  of  the  resolution  of  its  board  of  directors 
authorizing  its  president  and  secretary  to  execute  the  same.  § 1261; 
State  v.  Book  Co.,  69  Kan.  1 (1904). 

Penalties  for  Non-Compliance.  Foreign  corporations  are  subject 
to  all  the  provisions,  restrictions,  judicial  control  and  penalties  ap- 
plicable to  domestic  corporations  of  the  same  class.  § 1267.  Foreign 
corporations  forfeit  their  right  to  do  business  in  the  State  by  viola- 
tion of  anti-trust  law.  § 7868.  So  also  for  failure  to  file  reports. 
§ 1283;  Swift  v.  Platte,  68  Kan.  1 (1904). 

Taxation.  Same  as  for  domestic  corporations. 

Books.  Foreign  corporations  are  expressly  made  subject  to  all 
laws  regulating  domestic  corporations.  § 1267. 

Reports.  Annually  during  February,  foreign  corporations  must 
file  with  the  Secretary  of  State  on  blanks  furnished  by  him,  a state- 
ment subscribed  and  sworn  to  by  the  president  or  managing  officer 
and  secretary,  showing  the  condition  of  the  corporation  on  the  date 
of  the  last  regular  annual  statement  made  by  the  corporation  for  its 
own  use,  within  125  days  next  preceding,  or  on  the  31st  day  of  De- 
cember next  preceding,  and  to  contain:  (1)  Full  name.  (2)  Loca- 

tion of  principal  office  or  place  of  business,  without  thq  State,  and 


(3)  same  within  the  State,  if  any  it  has.  (4)  Names  and  addresses 
of  officers  and  directors.  (5)  Authorized  capital  stock  and  par  value 
of  shares.  (6)  Amount  of  capital  stock  subscribed.  (7)  Amount 
and  general  nature  of  its  resources  and  liabilities,  in  form  to  be  pre- 
scribed by  the  Charter  Board.  L.  1903,  Ch.  150. 

Attachments  Against.  Lie  on  the  ground  of  being  a foreign  cor- 
poration. § 4624. 

15.  Combinations  and  Monopolies. 

Trusts  are  defined  and  prohibited,  with  penalty  of  forfeiture  of 
charter  (§  7866),  and  all  right  to  do  business  (§  7868),  and  fines  of 
from  $100  to  $1,000  and  imprisonment  of  not  less  than  thirty  days 
nor  more  than  six  months,  the  Attorney  General  and  County  Attorney 
being  charged  generally  with  the  prosecution  of  offenders,  on  the 
same  penalties  as  inflicted  on  the  offenders.  §§  7872,  7864-7874.  The 
penal  statute  is  very  broad  in  its  terms,  making  violations  misde- 
meanors, punishable  by  the  same  fines  and  imprisonment,  and  with 
damages  to  persons  injured.  §§  2427-2450;  see  also  L.  1905,  Ch.  2, 
against  discrimination;  State  v.  Jack,  69  Kan.  387  (1904);  Keene  v. 
Gas  Co.,  Id.  284  (1904). 


KENTUCKY. 


i.  Corporation  Laws.* 

Constitution.  (1891.)  Corporations  not  to  be  created  by  special 
act.  § 59.  Property  to  be  taxed  the  same  as  that  of  individuals  but 
franchise  tax  may  be  imposed.  §§  174,  181.  Corporations  to  confine 
their  operations  to  the  business  authorized  by  their  charters.  § 192. 
Real  estate  which  is  not  necessary  for  the  legitimate  corporate  busi- 
ness not  to  be  held  longer  than  five  years.  Id.  Stock  and  bonds  to 
be  issued  only  for  labor  done  or  money  or  property  received;  ficti- 
tious issue  void.  § 193.  Corporations  must  maintain  place  of  business 
in  the  State  in  charge  of  agent  to  receive  service  of  process.  § 194. 
Trusts  to  be  suppressed  by  appropriate  legislation.  § 198.  Foreign 
corporations  to  be  subject  to  same  laws  as  domestic.  § 202.  Cumu- 
lative voting  prescribed.  § 207.  Public  ownership  or  interest  in  cor- 
porations prohibited.  §§  177,  179. 

Statutes.  The  general  corporation  law  is  contained  in  Chapter 
32,  Kentucky  Statutes,  1903,  of  which  Article  I contains  general  pro- 
visions, and  Articles  II  to  XII  treat  specially  of  banks,  trust,  insur- 
ance, railroad,  bridge,  building  and  loan,  religious,  charitable,  educa- 
tional, investment,  oil  and  gas  and  telegraph  companies,  and  news 
agencies.  Amendments  are  found  in  L.  1904,  Ch.  105,  p.  257.  Under 
the  general  provisions  corporations  may  be  formed  to  transact  any 
lawful  business  (§  538),  but  the  incorporations  enumerated  above  are 
also  subject  to  additional  provisions. 


2.  Taxes  and  Fees. 

Organization  Expenses.  To  the  State  Treasurer:  One-tenth  of 

one  per  cent,  on  capital  stock.  § 4225.  Recording  fees  to  Secretary 
of  State,  20  cents  per  folio.  For  affixing  seal  of  Commonwealth,  $2. 
§ 4539.  To  County  Clerk:  Recording  and  copying,  1 cent  for  each 
ten  words;  certificates,  50  cents.  § 1720;  L.  1904,  p.  298. 

Franchise  Tax.  None  imposed  on  business  corporations.  Cor- 
porations enjoying  special  franchises  and  public  service  companies 
are  taxed  on  any  franchise  held  both  to  the  State  and  locally  in  the 
county.  Const.,  § 181. 

Local  Taxation.  Business  corporations  are  taxed  as  are  indi- 
viduals. Const.,  § 174.  When  legally  called  on,  the  chief  officer  of 
any  corporation  must  submit  a full  statement  of  its  property  for  tax- 

* Sections  given  are  of  Carroll’s  Kentucky  Statutes,  1903. 


152 


KENTUCKY. 

Enactments  of  1906. 


1.  Corporation  Laws. 

Statutes.  Three  or  more  persons  may  associate  themselves  under 
the  general  provisions  of  Article  I,  Chapter  32  of  the  Statutes  (Car- 
roll’s  Kentucky  Statutes,  1903)  to  establish  a warehouse  company  with 
power  to  guarantee  receipts  issued  by  said  company  or  by  other  ware- 
house companies.  L.  1906,  Ch.  145,  p.  490.  Section  612  of  the  Ken- 
tucky Statutes,  relating  to  banks  and  trust  companies,  is  amended. 
L.  1906,  Ch.  146,  p.  491. 

2.  Taxes  and  Fees. 

Organization  Expenses.  No  corporate  powers  may  be  had  until 
the  organization  tax  of  one-tenth  of  one  per  cent,  on  the  capital  stock 
and  a like  sum  on  any  increase  thereof  has  been  paid  to  State  Treas- 
urer. L.  1906,  Ch.  22,  Art.  XIII,  § 1,  p.  208. 

Franchise  Tax.  Enactments  imposing  a franchise  tax  upon  Ken- 
tucky corporations  are  found  in  L.  1906,  Ch.  22,  Art.  II,  §§  1-9,  pp. 
179-183,  as  follows: 

All  corporations  having  capital  stock,  domestic  or  foreign,  liable 
to  pay  a franchise  or  license  tax,  shall  pay  an  annual  license  tax  based 
upOn  their  authorized  capital  stock,  of  30c.  on  each  $1,000  of  capital 
stock  represented  by  property  owned  and  business  transacted  in  the 
State  (§  3)  but  no  corporation  shall  pay  less  than  $10  (§  9),  the  amount 
of  capital  stock  on  which  such  tax  is  to  be  assessed  to  be  determined 
by  and  to  bear  such  relation  to  the  entire  capital  stock  as  the  property 
owned  and  business  transacted  in  State  does  to  the  aggregate  of  pro- 
perty and  business  done  in  and  out  of  State.  § 3. 

Any  corporation  may,  however,  pay  such  license  tax  on  its  whole 
stock  and  may  then  omit  annual  report.  (See  “ Reports.”)  Failure 
to  report  will  be  taken  as  evidence  that  the  corporation  so  . failing 
intends  to  pay  the  tax  on  its  entire  capital  stock.  § 3. 

The  Secretary  of  State  shall  certify  to  the  Auditor  of  Public 
Accounts  a list  of  corporations  liable  to  license  tax  and  furnish  ad- 
dresses and  names  of  agents  thereof,  and"  the  Auditor  of  Public 
Accounts  shall  notify  such  corporations  and  furnish  blanks  by  mail  for 
their  reports  (§  5),  (See  “Reports”),  and  shall  then  notify  such  cor- 
porations of  the  amount  assessed  against  them  and  it  shall  be  payable 
not  later  than  thirty  days  thereafter.  § 4. 

For  failure  to  make  reports  or  to  pay  the  tax  assessed,  corpora- 
tions incur  specified  penalties  and  on  conviction  are  suspended  until 
fine,  costs,  taxes,  and  penalties,  etc.,  are  paid.  Also  ten  per  cent,  per 
annum  shall  be  added  to  the  amount  of  unpaid  tax  (§  8),  but  domestic 
corporations  hereafter  incorporated  shall  not  be  required  to  pay  this 
tax  for  the  year  in  which  they  may  be  organized.  § 6. 

Corporations  such  as  schools,  lodges,  benevolent  institutions  and 
commercial  and  industrial  corporations  doing  purely  an  interstate 


KENTUCKY. 


commerce  business,  with  no  part  of  their  authorized  capital,  in  the 
meaning  of  this  statute,  employed  in  the  state,  are  excepted  from  taxa- 
tion under  this  chapter. 

5.  Corporate  Existence. 

When  Commenced.  No  corporate  powers  can  be  had  until  the 
organization  fees  are  paid  the  State  Treasurer.  L.  1906,  Ch.  22, 
Art.  XIII,  § 1,  p.  208. 

13.  Reports. 

In  connection  with  the  license  tax  of  30c.  on  each  $1,000  of  capital 
stock,  every  corporation  liable  to  such  tax  shall  file  on  or  before 
February  1st,  1907,  and  on  or  before  the  same  day  annually  thereafter, 
with  the  Auditor  of  Public  Accounts,  a written  report  under  oath 
of  president  or  secretary  of  corporation,  showing: 

1.  (a)  Name  of  corporation;  (b)  state  of  incorporation;  (c) 
date  of  incorporation;  (d)  principal  office  in  and  out  of  state;  (e) 
name  and  post-office  address  of  president  and  secretary;  (f)  name 
and  address  of  authorized  agent  upon  whom  process  may  be 
served;  (g)  name  and  address  of  agent  in  charge  of  business  in 
state. 

2.  Total  of  authorized  capital  stock. 

3.  (a)  Value  of  property  owned  and  used  in  Kentucky;  (b) 
where  situated;  (c)  value  of  property  owned  and  used  outside  of 
Kentucky;  (d)  aggregate  amount  of  business  done  during  year 
ending  December  31st;  (e)  the  proportion  of  such  business  done 
in  the  state  and  such  other  facts  as  the  Board  of  Valuation  and 
Assessment  may  require. 

The  said  Board  shall  determine  the  amount  of  capital  stock  on 
which  tax  shall  be  paid  and  fix  the  amount  at  the  rate  hereinbefore 
prescribed. 

Domestic  or  foreign  corporations  hereafter  formed  or  doing  busi- 
ness in  the  state,  shall  report  on  or  before  the  February  1st  succeed- 
ing. Penalties  as  given  under  “Franchise  Tax”  supra.  L.  1906,  Ch. 
22,  Art.  XI,  §§  4,  7,  PP-  180,  181. 

14.  Foreign  Corporations. 

Reports.  As  for  domestic  corporations.  Annual  report  must  be 
filed  on  or  before  February  1st  succeeding  entrance  to  State.  L.  1906, 
Ch.  22,  Art.  XI,  §§  4,  7,  pp.  180,  181. 


KENTUCKY. 


153 


ation.  § 4085.  If  the  corporation  pays  taxes  on  all  its  property, 
shares  are  not  taxed  in  hands  of  stockholders.  § 4088.  All  property 
is  assessed  as  of  September  15th.  § 4052. 

General.  On  increase  of  capital  stock,  one-tenth  of  one  per  cent, 
of  the  amount  of  increase.  § 4225. 


3.  Incorporation. 

Incorporators.  May  be  any  number  not  less  than  three.  § 538. 
They  manage  corporate  affairs  until  the  directors  are  elected,  and 
may  obtain  subscriptions  to  stock.  § 541.  No  requirements  as  to 
residence. 

Articles  of  Incorporation.  Must  be  signed  and  acknowledged  by 
the  incorporators  (§  540)  and  specify  (§  539) : 

(1)  Name,  which  must  be  such  as  to  distinguish  the  cor- 
poration from  any  other  engaged  in  the  same  business  in  the 
State.  Name  as  displayed  on  office  and  places  of  business 
and  as  shown  on  stationery,  must  be  followed  by  the  word 
“Incorporated.”  § 576. 

(2)  City  or  town  and  county  where  principal  office  or 
place  of  business  is  to  be  located.  Must  be  within  the  State. 
Const.,  § 194. 

(3)  Nature  of  the  business  or  objects  or  purposes  pro- 
posed to  be  transacted,  promoted  or  carried  on. 

(4)  Capital  stock  and  number  of  shares.  Shares  may  be 
classified.  § 564;  L.  1904,  Ch.  105.  Capital  stock  may  be  any 
amount.  No  restrictions  on  par  value  of  shares. 

(5)  Name,  residence  and  number  of  shares  subscribed  by 
each  of  its  stockholders. 

(6)  Time  corporate  existence  is  to  commence  and  dura- 
tion. May  be  perpetual. 

(7)  Officers  or  persons  to  conduct  the  corporate  affairs 
and  times  and  places  of  their  election. 

(8)  Highest  amount  of  indebtedness  or  liability  which  the 
corporation  may  at  any  time  incur. 

(9)  Whether  private  property  of  stockholders,  not  sub- 
ject thereto  by  the  provisions  of  the  law  under  which  the 
corporation  is  organized,  shall  be  subject  to  payment  of  cor- 
porate debts,  and  if  so,  to  what  extent.  § 539.  Mode  of 
voluntary  dissolution  may  be  provided  for.  § 561. 

Filing  and  Recording.  The  articles  are  recorded  in  the  office  of 
the  clerk  of  the  county  in  which  the  corporation’s  principal  office  or 
place  of  business  is  located,  and  a copy  thereof  is  filed  and  recorded 
in  the  office  of  the  Secretary  of  State.  § 540. 


CLASSIFIED  CORPORATION  LAWS. 


154 

4.  Organization. 

First  Meetings.  No  specific  provisions.  Elections  of  directors 
must  be  held  within  the  State.  § 551. 

By-Laws.  Are  to  be  adopted  by  the  directors.  § 542.  Their 
scope  is  not  prescribed. 

Certificates.  Every  corporation  carrying  on  any  business  in  the 
State,  whether  foreign  or  domestic,  must  file  with  the  Secretary  of 
State  a statement  signed  by  its  president  and  secretary,  stating  the 
location  of  its  office  or  offices  in  the  State  and  the  name  or  names  of 
its  agent  or  agents  thereat  to  receive  service  of  process.  § 571. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  article's  of  incorporation  with  Sec- 
retary of  State  and  payment  of  license  tax.  § 542.  Continues  after  ex- 
piration or  dissolution  for  the  purpose  of  closing  up  business.  § 561. 
Duration  is  not  limited  by  statute,  but  may  be  in  articles  of  incorpora- 
tion. § 539. 

Beginning  Business.  May  not  be  commenced  with  persons  other 
than  stockholders  until  at  least  50  per  cent,  of  the  capital  stock  has 
been  subscribed  for  in  good  faith.  § 543.  Must  be  commenced  under 
penalty  of  forfeiture  of  charter  within  two  years  after  organization. 
§ 565.  Location  of  office  and  name  of  agent  in  charge  must  be  filed 
with  Secretary  of  State  before  business  is  commenced.  § 571.  (See 
“Certificates,”  under  § 4.) 

Renewal.  No  statutory  provisions,  the  law  contemplating  per- 
petual existence. 

Forfeiture  of  Charter.  Occurs  on  failure  to  commence  business 
in  good  faith  within  two  years  after  organization.  § 565.  Also  for 
abuse  or  misuse  of  corporate  powers.  §569;  Const.,  §205.  Also  for 
violation  of  laws  against  trusts,  pools  and  combinations.  § 3919. 
Or  for  contribution  to  political . organizations.  § 1574a;  see  also 

§ 1987. 

Dissolution.  May  be  effected  by  written  consent  of  owners  of 
a majority  of  the  stock,  unless  another  mode  is  prescribed  in  the  ar- 
ticles of  incorporation,  but  notice  must  be  published  at  least  once  a 
week  for  four  consecutive  weeks  in  a newspaper  published  in  the 
county,  of  the  fact  that  the  corporation  is  closing  up  its  business. 
§ 56i. 

6.  Corporate  Powers. 

General.  General  powers  are  enumerated.  § 542. 

To  Hold  Property.  Real  estate  not  necessary  for  the  legitimate 
business  of  the  corporation,  escheats  to  State  if  held  for  a longer 
period  than  five  years.  § 567;  Const.,  § 192. 

Its  Own  Stock.  May  only  hold  its  own  stock  when 


KENTUCKY. 


i5S 


taken  to  prevent  loss  on  a debt  previously  contracted;  and  no  such 
stock  may  be  held  for  longer  than  one  year.  § 544. 

Stock  of  Other  Corporations.  No  direct  provisions. 
But  consolidation  is  permitted.  § 555. 

To  Borrow  Money.  Fictitious  increase  of  indebtedness  is  void. 
§ 568;  Const.,  § 193.  Highest  amount  of  indebtedness  to  be  incurred 
is  stated  in  articles  of  incorporation.  § 539. 

To  Do  Business  in  Other  States.  No  direct  provisions. 

Consolidation  or  Merger.  Consolidation  between,  business  cor- 
porations is  provided  for,  with  twenty  days’  notice  of  stockholders’ 
meetings  by  mail  prior  to  entering  into  the  agreement  by  the  direc- 
tors, and  publication  of  notice  for  two  weeks;  and  written  consent  of 
at  least  two-thirds  of  the  stock.  § 555.  Effects  of  and  procedure 
after  consolidation  with  rights  of  minority  stockholders  are  provided 
for.  §§  556-558. 

Amendment  of  Charter.  May  be  effected  by  written  consent  of 
owners  of  at  least  two-thirds  of  the  capital  stock.  Tlfe  amendment 
must  be  signed  and  acknowledged  by  the  directors  or  a majority  of 
them,  and  be  filed  and  recorded  as  were  original  articles  of  incorpora- 
tion. § 559. 


7.  Capital  Stock. 

Amount.  Not  prescribed. 

Initial  Payment.  At  least  50  per  cent,  of  the  capital  stock  must 
be  subscribed  in  good  faith  before  corporation  can  commence  busi- 
ness. § 543. 

Consideration  for  Issue.  Stock  must  not  be  issued  except  for 
value  in  labor  done,  or  money  or  property  actually  received  and  ap- 
plied to  the  purposes  for  which  the  corporation  was  created,  and 
neither  labor  nor  property  shall  be  received  in  payment  of  stock  or 
bonds  at  a greater  value  than  the  market  price  at  the  time  such  labor 
was  done,  or  property  delivered  Fictitious  increase  of  stock  or  in- 
debtedness is  void.  § 568;  Const.,  § 193. 

The  capital  stock  shall  be  paid  in  such  amounts  and  times  as  the 
directors  require;  for  non-payment  of  calls,  directors  may  sell  de- 
linquent shares  on  twenty  days’  notice  by  mail  to  the  stockholder. 
§ 543- 

Increase  or  Decrease.  May  be  accomplished  by  a vote  or  writ- 
ten consent  of  two-thirds  of  the  capital  stock,  on  notice  of  proposed 
change  mailed  to  each  stockholder  twenty  days  before  the  meeting. 
A statement  of  the  increase  or  decrease  must  be  signed  and  acknowl- 
edged by  the  president  and  majority  of'  the  directors  and  filed  and 
recorded  in  the  same  manner  as  original  articles  of  incorporation. 
§ 553- 

Classes  of  Stock.  Classes  of  stock,  as  preferred,  common  and 
deferred,  or  as  may  be  otherwise  designated,  may  be  provided  for 


156 


CLASSIFIED  CORPORATION  LAWS. 


in  charter,  or  created  after  incorporation  by  a two-thirds  vote  of 
outstanding  capital  stock  cast  in  person  or  by  proxy  at  any  regular 
meeting,  or  at  a special  meeting  held  on  twenty  days’  notice.  May 
also  be  effected  by  written  consent  of  two-thirds  of  the  stock.  Terms 
and  manner  of  issue  to  be  stated  in  the  consent  or  resolution.  No 
preferred  stock  may  be  issued  except  for  cash  or  its  equivalent,  nor 
for  less  than  the  par  value  of  the  shares.  A corporation,  all  of  whose 
stock  is  common,  may  by  two-thirds  vote  convert  it  into  common 
.and  preferred  and  distribute  pro  rata  to  the  old  stockholders.  § 564; 
L.  1904,  Ch.  105. 

Par  Value  of  Shares.  Not  prescribed.  Must  be  shown  on  the 
stock  certificates.  L.  1904,  Ch.  105. 

Stock  Certificates.  Are  not  prescribed  as  to  form  or  contents, 
except  that  they  must  show  par  value  of  shares.  L.  1904,  Ch.  105. 

Transfer  of  Stock.  Shares  of  stock  are  transferable  on  the  books 
of  the  corporation  in  such  manner  as  the  by-laws  direct,  and  on  such 
transfer  the  purchaser  succeeds  to  all  the  rights  and  liabilities  of  the 
original  holder.  § 545. 

8.  Stockholders. 

Rights  and  Powers.  They  control  amendments,  consolidation, 
etc.,  by  a two-thirds  vote.  §§  553,  555,  559.  Minority  stockholder 
suing  to  enforce  corporate  contract  with  another  corporation  upheld. 
Ry.  Co.  v.  Dodd,  115  Ky.  176  (1903). 

Liability.  Stockholders  are  liable  for  corporate  debts  only  to 
the  extent  of  unpaid  subscriptions.  Such  liability  must  be  enforced 
within  two  years  from  the  time  of  transfer.  § 547. 

Meetings.  Time  and  manner  of  elections  are  to  be  stated  in 
articles  of  incorporation.  § 539.  All  elections  for  directors  must, 
however,  be  held  within  the  State,  at  annual  meeting  to  be  held  on 
day  named  in  the  by-laws,  which  must  not  be  changed  within  sixty 
days  before  the  day  on  which  the  election  is  to  be  held.  Notice  of 
any  such  change  must  be  given  each  stockholder  twenty  days  before 
the  election.  § 551. 

Notice.  If  an  election  is  not  held  on  the  day  specified  in  the 
by-laws,  a special  meeting  must  be  called  within  thirty  days  there- 
after, of  which  due  notice  must  be  given  each  stockholder  in  person 
or  by  mail.  § 551- 

Quorum.  Not  prescribed. 

Voting.  Must  be  by  ballot  for  directors.  § 551.  Cumulative 
voting  is  prescribed.  § 552;  Const.,  § 207.  Has  been  held  not  compul- 
sory. Schmidt  v.  Mitchell,  101  Ky.  570  (1897). 

Proxies.  Voting  may  be  by  written  proxy.  § 552.  Manner  to 
be  prescribed  by  by-laws.  § 551. 

9.  Directors. 

Number.  Must  be  not  less  than  three.  § 551.  They  may  by  a 
vote  of  the  stockholders  be  divided  into  one,  two  or  three  classes, 


KENTUCKY. 


157 


one  class  to  be  elected  each  year.  § 551.  Change  of  number  may  be 
effected  by  amendment  of  articles.  §§  539,  559. 

Qualifications.  Each  director  must  own  at  least  three  shares  of 
stock.  § 551.  One  who  holds  stock  in  a fiduciary  capacity  is  eligible 
to  the  office  of  director.  Schmidt  v.  Mitchell,  101  Ky.  570  (1897). 

Powers.  They  have  general  charge  of  the  property  and  affairs 
of  the  corporation.  They  adopt  by-laws.  § 542.  They  may  fill  va- 
cancies on  the  board  until  the  next  election.  § 551. 

Liability.  For  declaring  or  paying  any  dividend  when  the  com- 
pany is  insolvent,  or  which  would  render  it  insolvent  or  diminish  its 
capital  stock,  directors  render  themselves  jointly  and  severally  liable 
for  corporate  debts  then  existing  or  incurred  while  a majority  of 
them  remain  in  office.  § 548.  (See  § 10,  “Officers.”) 

Meetings.  Directors’  meetings  are  wholly  governed  by  the  by- 
laws as  to  time,  place  and  notice.  A majority  is  required  to  consti- 
tute a quorum.  § 551. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  The  officers  are  to  be  designated  in  the  articles  of  in- 
corporation. § 539.  One  or  more  places  of  business  must  be  main- 
tained in  the  State  with  an  agent  or  agents  in  charge.  § 571;  Const., 
§ 194- 

For  any  statements  in  reports  materially  false,  those  assenting 
thereto  are  jointly  and  severally  liable  for  resulting  loss  or  damage. 
§ 549.  So  also  for  violation  of  the  corporation  law,  by  omission  or 
commission;  and  in  addition  a fine  is  imposed  of  from  $100  to  $1,000. 
§ 550.  For  violations  of  laws  against  trusts,  pools  and  combinations, 
the  parties  responsible  are  liable  to  fine  of  from  $500  to  $5,000  and 
imprisonment  from  six  to  twelve  months.  § 3917. 

11.  Principal  Office. 

Corporations  carrying  on  business  in  this  State  shall  at  all  times 
have  one  or  more  known  places  of  business  in  the  State,  and  an  au- 
thorized agent  or  agents  thereat  to  receive  service  of  process.  § 571; 
Const.,  § 194.  Certificate  of  any  change  of  principal  office  must  at 
once  be  filed  with  Secretary  of  State.  Non-compliance  is  made  a 
misdemeanor,  punishable  by  fine  of  from  $100  to  $1,000.  § 571.  Name 
must  be  conspicuously  displayed  at  the  principal  place  or  places  of 
business,  followed  by  the  word  “Incorporated,”  on  penalty  of  $100 
to  $500.  § 576. 

12.  Corporate  Books. 

What  Required.  A book  must  be  kept  in  which  must  be  entered 
the  name,  post-office  address  and  number  of  shares  of  stock  held  by 
each  stockholder,  and  the  time  when  each  person  became  a stock- 


158 


CLASSIFIED  CORPORATION  LAWS. 


(Kentucky) 

holder;  also  all  transfers  of  stock,  stating  number  of  shares,  when 
transferred  and  by  and  to  whom.  § 546. 

Where  Kept.  At  principal  office.  § 546. 

Examination  of.  The  stock  and  transfer  book  is  subject  during 
business  hours  to  inspection  of  stockholders  and  persons  doing  busi- 
ness with  the  corporation.  § 546. 

13.  Reports. 

None  required  of  business  corporations.  Corporations  liable  to 
franchise  tax  file  reports  between  September  15th  and  October  1st 
of  each  year,  with  the  State  Auditor  of  Public  Accounts.  § 4078. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation  car- 
rying on  any  business  in  the  State  of  Kentucky,  must  maintain  one 
or  more  known  places  of  business  therein,  with  an  agent  or  agents 
thereat  on  whom  process  may  be  served;  and  a statement  of  such 
place  or  places  of  business  and  name  or  names  of  such  agent  or 
agents  must  be  filed  with  the  Secretary  of  State  before  any  business 
can  be  lawfully  carried  on  in  the  State.  Any  change  in  location  of 
office  or  offices,  agent  or  agents,  must  be  at  once  notified  to  the 
Secretary  of  State.  § 571;  Const.,  § 194.  No  more  favorable  condi- 
tions may  be  accorded  to  foreign  corporations  than  to  domestic  ones. 
Const.,  § 202. 

Penalties  for  Non-Compliance.  Is  declared  a misdemeanor,  pun- 
ishable by  fine  of  from  $100  to  $1,000.  § 571.  For  transfer  of  actions 

to  Federal  courts  without  consent  of  adverse  party,  right  to  do 
business  in  the  State  is  forfeited,  and  such  act  is  declared  a misde- 
meanor, punishable  by  fine  and  imprisonment  the  same  as  for  unlaw- 
fully doing  business  in  the  State.  § 572. 

Taxation.  Same  returns  and  franchise  taxes  as  on  domestic  cor- 
porations of  same  class,  on  proportion  earned  in  the  State.  § 4080. 

Books.  No  provisions. 

Reports.  As  for  domestic  corporations.  §§  4078,  4080. 
Attachments  Against.  No  provisions. 

15.  Combinations  and  Monopolies. 

Trusts,  pools,  combinations  or  other  organizations  to  depreciate 
values  or  enhancing  cost,  are  prohibited.  §§  3915-3921;  Const.,  § 198. 
Penalties  for  violations,  fines  of  from  $500  to  $5,000,  imprisonment  of 
guilty  individuals  from  six  to  twelve  months  and  forfeiture  of  charter. 
§§  3917,  3919.  All  contracts  in  violation  are  void.  § 3916. 


LOUISIANA. 

Enactments  of  1906. 


2.  Taxes  and  Fees. 

Local  Taxation.  Amendments  to  Section  28  of  Act  170,  1898 
(§  3363  Wolf’s  Revised  Statutes,  p.  1563),  provide  that  all  corporations 
save  those  enumerated  in  Section  27  (banks  and  banking  corporations) 
and  life  insurance  companies  organized  in  Louisiana,  shall  be  assessed 
directly  on  all  property  owned  by  such  corporations,  taxable  under 
Sec.  1 of  the  present  Act.  Property  of  life  insurance  corporations 
organized  in  Louisiana  shall  be  assessed  to  corporation  as  to  a natural 
person,  in  the  parish,  town,  village  or  district  of  its  residence.  L.  1906, 
Act  66,  pp.  103-105. 

13.  Reports. 

Amendments  to  Section  28,  Act  170,  1898,  also  provide  that  in 
event  of  failure  to  make  sworn  returns  within  first  twenty  days  of 
January,  the  president  or  other  officer  responsible  for  such  neglect  is 
guilty  of  a misdemeanor  and  may  be  fined  or  imprisoned  or  both  at 
discretion  of  Court.  Also  that  corporations  not  required  by  law  to 
make  sworn  statements  of  their  condition  shall  be  required  to  furnish 
within  first  twenty  days  of  January  under  like  penalty  a sworn  state- 
ment of  costs  and  values  as  shown  on  books,  and  of  the  earning  capac- 
ity of  the  corporation.  L.  1906,  Act  66,  pp.  103-105.  (Amending  § 28 
of  Act  170,  1898,  Wolf  § 3363,  p.  1563.) 


LOUISIANA. 


1.  Corporation  Laws.* 

Constitution.  (1898.)  Corporations  not  to  be  created  nor  char- 
ters amended  by  special  law.  Art.  48.  General  laws  to  be  passed  for 
creation  of  private  corporations.  Art.  275.  Grants  of  exclusive  rights, 
privileges  or  immunities  prohibited.  Art.  48.  Neither  the  State  nor 
any  political  corporation  shall  subscribe  for  corporate  stock  nor  lend 
credit  to  private  company.  Art.  58.  Taxation  of  foreign  corporations 
may  be  different  from  taxation  of  domestic  corporations.  Art.  242. 
Corporations,  both  domestic  and  foreign,  doing  business  in  the  State, 
must  maintain  an  office  therein  with  an  agent  in  charge  to  receive  ser- 
vice of  process  (Art.  264),  at  which  transfers  of  stock  must  be  made, 
and  books  kept  for  public  inspection  showing  amount  of  stock  sub- 
scribed, names  of  stockholders  and  their  holdings,  amount  paid  and  by 
whom,  transfers  with  dates  thereof,  assets  and  liabilities  and  names 
and  residences  of  officers.  Art.  273.  Corporation  only  to  engage  in 
business  expressly  authorized  by  charter.  Art.  265.  Real  estate  except 
that  necessary  for  corporate  purposes  not  to  be  held  longer  than  ten 
years.  Id.  Issue  of  stock  or  bonds  except  for  labor  done  or  money 
or  property  actually  received  prohibited.  Forfeiture  of  charter  to 
result  from  fictitious  issue.  Art.  266.  Capital  stock  to  be  increased 
or  decreased  only  according  to  general  law  and  with  consent  of  ma- 
jority of  stock  given  at  meeting  held  on  thirty  days’  notice.  Art.  267. 

Statutes.  General  provisions  as  to  corporations  are  found  in  the 
Revised  Laws  of  Louisiana  (1904),  §§  677-746,  pp.  220-278.  Provisions 
relating  to  mechanical,  manufacturing  and  mining  corporations  are 
contained  in  § 683,  p.  226.  Banking  institutions  are  treated  of  in 
§§  276-312,  pp.  75-120;  building  and  loan  associations,  pp.  136-150; 
insurance  companies,  pp.  843-907;  railroads,  pp.  1478-1508.  Amend- 
ments are  found  in  L.  1904,  Acts  54,  78,  180. 

Provisions  of  a general  nature  relating  to  corporations  are  also 
found  in  the  Revised  Civil  Code  (1870),  Art.  427-446. 

Under  the  general  law  corporations  may  be  created  to  carry  on 
any  business  or  branches  of  business  whether  related  or  not,  that  it 
would  be  lawful  for  any  individual  to  carry  on,  excepting  only  insur- 
ance and  banking  business  and  any  business  that  would  entitle  the 
corporation  to  exercise  the  right  of  eminent  domain.  L.  1904,  Act  78. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  For  every  cer- 
tificate to  which  seal  is  affixed,  $1;  for  recording,  25  cents  per  folio. 
For  certificate  of  authority  or  compliance,  $10.  p.  1749. 

* References  are  to  Revised  Laws  of  1904,  unless  otherwise  stated. 


159 


i6o 


CLASSIFIED  CORPORATION  LAWS. 


Notary’s  fees  for  writing  and  recording  original  acts  of  incor- 
poration are  20  cents  per  folio;  for  passing  an  act  written  by  others, 
25  cents,  and  10  cents  per  folio  for  recording;  for  each  certificate  and 
seal,  25  cents;  for  all  copies,  10  cents  per  folio,  pp.  281-2.  Notary 
fees  for  preparation  of  charter  range  as  do  attorney’s  fees  for  similar 
work,  from  $25  up  according  to  the  nature  of  the  charter. 

Recorder’s  fee,  25  cents  per  folio,  including  certificate  with  seal; 
for  copies,  15  cents  per  folio  (pp.  306,  307),  or  outside  the  Parish  of 
Orleans,  10  cents  per  folio  for  recording  and  same  for  copies,  p.  292. 
Cost  of  publication  varies  with  the  location,  newspaper  selected  and 
the  length  of  charter. 

Franchise  Tax.  None  imposed.  A license  tax  is,  however,  im- 
posed on  gross  receipts  of  various  enumerated  businesses  at  vary- 
ing rates,  which  differ  for  foreign  corporations,  pp.  1674-1723,  1714- 
1716. 

Local  Taxation.  There  are  certain  constitutional  exemptions  in 
favor  of  mining  and  manufacturing  properties  for  ten  years  from 
January  1,  1900.  Const.,  Art.  230.  Corporate  stock  is  taxed  only  on 
the  excess  of  market  value  over  tangible  property  otherwise  assessed. 
Merchants,  etc.  Co.  v.  Assessors,  40  La.  An.  371  (1888);  State  v. 
Board  of  Assessors,  47  La.  An.  1498  (1895). 

General.  For  filing  annual  statement,  $15;  additional  papers,  25 
cents,  p.  1749. 

3.  Incorporation. 

Incorporators.  Of  general  corporations  must  be  three  or  more. 
L.  1904,  Act  78.  No  requirements  as  to  residence. 

Charter.  Is  to  be  signed  and  acknowledged  before  a notary  pub- 
lic (pp.  228,  229),  and  must  contain  (p.  228): 

(1)  Name  and  title  of  the  corporation.  Name  must  end 
with  the  word  “ limited  ” if  liability  of  stockholders  is  to  be 
limited  and  this  name  must  be  conspicuously  displayed  out- 
side every  office  or  place  of  business  of  the  corporation  and 
on  all  its  stationery,  pp.  242,  243. 

(2)  Place  of  its  domicile.  Must  be  within  the  State. 
Const.,  Art.  264. 

(3)  A description  of  the  purposes  for  which  it  is  estab- 
lished and  the  nature  of  the  business  to  be  carried  on. 

(4)  Designation  of  officer  on  whom  citation  may  be  served. 

(5)  Amount  of  capital  stock,  the  number  of  shares,  the 
amount  of  each,  and  the  time  when  and  manner  in  which 
subscriptions  shall  be  paid.  Of  limited  liability  corporations, 
stock  must  not  be  less  than  $5,000.  p.  243.  Of  mechanical, 
manufacturing  and  mining  corporations  not  less  than  $5,000 
nor  more  than  $1,000,000.  p.  227. 

(6)  The  mode  of  elections  of  directors  or  managers. 


LOUISIANA. 


161 


(7)  Mode  of  liquidation  at  the  termination  of  charter. 

Charter  period  is  99  years,  p.  227. 

Filing  and  Recording.  The  duly  executed  charter  is  recorded  in 
the  office  of  the  recorder  of  mortgages  (outside  of  the  Parish  of 
Orleans  the  clerk  of  the  district  court  is  ex  officio  recorder)  at  the 
domicile  of  the  corporation,  together  with  a list  of  the  original  sub- 
scribers to  the  stock  of  the  corporation.  The  charter  is  then  pub- 
lished in  a newspaper  at  its  domicile,  or  within  the  Parish,  once  a 
week  for  thirty  days.  A copy  of  the  charter  certified  by  the  recorder 
and  having  attached  a certificate  of  the  book  and  folios  of  such  record, 
together  with  the  list  of  subscribers  and  a copy  of  the  newspaper 
with  proof  of  due  publication  by  the  publisher,  is  filed  with  the  Sec- 
retary of  State,  pp.  228-9. 

4.  Organization. 

First  Meetings.  Must  be  held  at  place  of  domicile  in  Louisiana, 
p.  253.  As  no  directors  or  officers  are  named  in  the  charter,  an  elec- 
tion of  directors  must  be  held  by  incorporators  and  an  election  of 
officers  thereafter  by  the  directors. 

By-Laws.  Are  to  be  adopted  by  stockholders,  p.  227. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  charter  in  Secretary  of  State’s 
office,  extracts  from  his  books  being  proof,  p.  230.  The  corporate 
existence  lasts  ninety-nine  years,  p.  227. 

Beginning  Business.  May  be  commenced  forthwith  but  generally 
corporations  must  have  at  least  $3,000  subscribed  stock.  L.  1904, 
Act  78. 

Renewal.  No  provisions. 

Forfeiture  of  Charter.  Is  to  be  decreed  by  the  district  court  at 
the  instance  of  any  creditor,  on  insolvency,  evidenced  by  return  of 
execution  with  no  property  found,  p.  231.  Charter  is  to  be  forfeited 
for  issuance  of  fictitious  stock.  Const.,  Art.  266;  State  v.  Water  Sup- 
ply Co.,  hi  La.  1049  (1903).  For  violation  of  law  against  trusts  and 
combinations,  charter  may  be  forfeited,  p.  1804. 

Dissolution.  May  be  had  on  a three-fourths  vote  of  the  stock 
represented  at  regular  meeting,  certificate  of  same  being  filed  as  was 
original  charter,  together  with  copy  of  minutes  and  resolutions  at- 
tested by  the  secretary  of  the  corporation,  pp.  229,  230.  Charter  is 
to  contain  provisions  for  liquidation,  p.  228. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated,  p.  227. 

To  Hold  Property.  No  corporation  shall  hold  any  real  estate 


CLASSIFIED  CORPORATION  LAWS. 


162 


for  a longer  period  than  ten  years,  except  such  as  is  necessary  for 
its  business.  Const.,  Art.  265. 

Its  Own  Stock.  On  sale  of  stock  after  default  on  pay- 
ment of  calls,  a corporation  may  purchase  its  own  stock.  Succession 
of  Thomson,  46  La.  An.  1074  (1894).  But  such  purchase  cancels  it 
and  it  is  reissued  as  new  stock.  Belknap  v.  Adams,  49  La.  An.  1350 
(1897). 

Stock  of  Other  Corporations.  This  power  has  been 
recognized  by  the  courts.  Mulqueensy  v.  Shaw,  50  La.  An.  1060 
(1898);  State  v.  Newman,  51  La.  An.  833  (1899).  But  it  may  not  vote 
such  stock  at  elections  of  officers  to  govern  the  other  corporations, 
since  that  would  amount  to  engaging  in  other  business  than  that 
authorized  by  its  charter.  State  v.  Newman,  supra. 

To  Borrow  Money.  This  power  is  granted  without  limit  to  cer- 
tain manufacturing  corporations  and  corporations  for  internal  im- 
provements, with  the  power  to  mortgage  property  and  issue  bonds 
for  corporate  purposes,  p.  233.  By  action  of  the  president  and  direc- 
tors, bonds  may  be  converted  into  stock  within  ten  years  from  their 
date.  p.  236. 

To  Do  Business  in  Other  States.  Is  permitted  by  implication  in 
the  provisions  directing  an  office  with  agent  in  charge,  and  books  to 
be  kept  in  the  State,  pp.  228,  253;  Const.,  Arts.  264,  273. 

Consolidation  or  Merger.  Of  any  two  business  or  manufactur- 
ing corporations,  whose  objects  and  business  are  of  the  same  general 
nature,  may  be  accomplished  by  a three-fifths  vote  of  the  capital  stock 
of  each  of  the  constituent  companies.  Certificate  to  be  filed  and  re- 
corded the  same  as  original  charter  (p.  246),  but  in  addition  there 
must  be  filed  with  the  Secretary  of  State  the  agreement  of  consoli- 
dation and  a copy  of  the  minutes  of  the  meetings  (p.  229),  the  agree- 
ment to  be  duly  acknowledged  and  the  copy  attested  and  acknowl- 
edged by  the  secretary  of  the  corporation,  p.  220;  Hancock  v.  Hol- 
brook, 40  La.  An.  53  (1888). 

Amendment  of  Charter.  May  be  made  by  a three-fourths  vote  of 
the  stock  represented  at  a meeting  convened  for  that  purpose. 
Amendments  are  filed  and  recorded  the  same  as  the  original  charter 
(p.  230),  but  a copy  of  the  minutes  of  such  meeting,  duly  attested 
and  acknowledged  by  the  secretary  of  the  corporation,  must  also  be 
filed  and  recorded  with  the  Secretary  of  State,  p.  229.  (See  under 
§ 7,  “Increase  or  Decrease.”) 

7.  Capital  Stock. 

Amount.  Of  limited  liability  companies  must  be  not  less  than 
$5,000.  p.  243.  Of  mechanical,  manufacturing  and  mining  corpora- 
tions, not  less  than  $5,000  nor  more  than  $1,000,000.  p.  227. 

Initial  Payment.  General  corporations  must  have  a subscribed 
capital  of  not  less  than  $3,000.  L.  1904,  Act  78. 

Consideration  for  Issue.  May  be  labor  done  or  money  or  prop- 
erty actually  received,  but  all  fictitious  issues  of  stock  are  void,  and 


LOUISIANA. 


163 


render  corporation  liable  to  forfeiture  of  charter.  Const.,  Art.  266. 
Time  and  manner  of  payment  of  subscriptions  are  to  be  prescribed 
in  the  charter,  p.  228. 

Increase  or  Decrease.  May  be  had  by  a vote  of  two-thirds  value 
of  the  stock,  at  a meeting  duly  called  for  that  purpose  on  notice  pub- 
lished at  least  thirty  days  and  sent  by  mail  at  least  forty  days  before 
such  meeting.  Two-thirds  of  the  stock  must  be  present  to  consti- 
tute a quorum.  A certificate  of  the  proceedings,  showing  all  the 
facts  as  to  the  vote  and  increase  or  decrease  of  the  stock,  and  as  to 
the  debts  and  liabilities  of  the  corporation,  is  signed  and  verified  by 
the  chairman  and  secretary  of  the  meeting  and  filed  with  the  Secre- 
tary of  State,  pp.  230,  231;  Const.,  Art.  267. 

Classes  of  Stock.  No  provisions. 

Par  Value  of  Shares.  No  limitations.  Is  to  be  prescribed  in 
charter,  p.  228. 

Stock  Certificates.  Are  not  prescribed  as  to  form.  Benedict  v. 
Co.,  32  So.  174  (1902). 

Transfer  of  Stock.  May  be  made  as  between  the  parties  by  de- 
livery of  the  certificate,  accompanied  by  a written  transfer  or  power 
of  attorney,  but  no  such  transfer  is  valid  as  against  the  corporation 
until  recorded  on  the  books  of  the  corporation  or  issue  of  new  cer- 
tificate. L.  1904,  Act  180. 

8.  Stockholders. 

Rights  and  Powers.  They  control  amendments  by  a three- 
fourths  vote.  p.  230.  A majority  may  liquidate.  Trisconi  v.  Win- 
ship,  43  La.  An.  45  (1891).  They  have  full  right  to  examine  books. 
Const.,  Art.  273;  State  v.  Bank,  51  La.  An.  426  (1899);  Bourdette  v. 
Sieward,  52  La.  An.  1333  (1900). 

Liability.  Provided  the  word  “limited”  is  the  last  word  of  the 
corporate  name,  no  stockholder  shall  ever  be  held  liable  for  the  con- 
tracts or  faults  of  a corporation  on  any  further  sum  than  the  unpaid 
balance  due  to  the  company  on  the  shares  owned  by  him.  pp.  232, 
243- 


Meetings.  Must  be  held  at  the  place  of  domicile  in  the  State, 
p.  253.  Notice  for  meetings  to  increase  or  decrease  stock  is  prescribed 
by  Constitution  to  be  thirty  days.  p.  230;  Const.,  Art.  267.  Otherwise 
all  matters  regarding  meetings  are  left  to  the  by-laws. 

9.  Directors. 

Number.  Not  prescribed. 

Qualifications.  No  provisions.  May  be  fixed  by  by-laws.  Fowler 
v.  Co.,  104  La.  751  (1901). 

Powers.  Are  to  be  defined  by  by-laws.  Fowler  v.  Co.,  104  La. 
751  (1901);  Co.  v.  Flanner,  44  La.  An.  22  (1892). 


164 


CLASSIFIED  CORPORATION  LAWS. 


Liability.  Directors  and  all  other  persons  involved  are  liable  for 
any  resulting  damage  or  indebtedness  arising  from  the  omission  of 
the  word  “limited”  from  the  corporate  name.  p.  243.  They  are  also 
liable  to  fine  and  imprisonment  for  violation  of  anti-trust  laws.  pp. 
1804-1806. 

Meetings.  Must  be  held  at  the  place  of  domicile  in  the  State, 
p.  253.  Time,  notice  and  quorum  to  be  regulated  by  by-laws. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  Corporations  must  keep  a record  of  the  names  and  ad- 
dresses of  their  officers.  Const.,  Art.  273.  Their  number,  designations 
and  duties  are  to  be  prescribed  by  by-laws.  p.  227.  They  are  liable 
in  damages  for  refusal  to  allow  examination  of  books.  Bourdette  v. 
Sieward,  107  La.  258  (1902).  (See  “Liability,”  under  §9.) 

11.  Principal  Office. 

One  must  be  maintained  in  the  State,  and  be  named  in  the  char- 
ter, with  an  agent  in  charge  thereof  on  whom  process  may  be  served, 
pp.  228,  253;  Const.,  Art.  264.  The  corporate  name  must  be  con- 
spicuously displayed  on  its  offices  or  places  of  business  and  stationery, 
p.  243;  Const.,  Art.  273. 

12.  Corporate  Books. 

What  Required.  Transfers  of  stock  must  be  made  at  the  cor- 
porate office  or  place  of  business,  where  books  shall  be  kept  showing 
the  amount  of  capital  stock  subscribed,  the  names  of  its  owners,  the 
amounts  owned  and  paid  by  them  respectively,  the  transfers  of  stock 
with  dates,  the  corporate  assets  and  liabilities  and  the  names  and 
residences  of  officers.  Const.,  Art.  273. 

Where  Kept.  They  must  be  kept  at  its  place  of  domicile  in  its 
office.  Const.,  Art.  2 73. 

Examination  of.  Shareholders  have  full  right  to  examine  books, 
and  for  refusal  have  cause  of  action  for  damages  against  the  officers. 
Bourdette  v.  Sieward,  52  La.  An.  1333  (1900);  State  v.  Allen,  104  La. 
301  (1901).  The  corporate  books  are  open  for  public  inspection. 
Const.,  Art.  273. 

13.  Reports. 

For  purposes  of  assessments  and  taxation,  the  assessor  must  be 
furnished  with  a sworn  statement  of  the  cost  of  the  real  and  personal 
property  of  the  corporation,  the  value  at  which  it  is  carried  on  the 
books  and  of  the  earning  capacity  of  the  corporation.  This  state- 
ment must  be  made  within  the  first  twenty  days  of  January  of  each 
year.  p.  1563.  In  New  Orleans  tax  returns  must  be  made  on  blanks 


LOUISIANA. 


165 


furnished,  within  twenty  days  of  the  time  such  blanks  are  received, 
pp.  1558,  1559- 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  All  foreign  corporations  ex- 
cept mercantile  corporations,  doing  business  in  the  State,  must  file 
in  the  office  of  the  Secretary  of  State  a declaration  of  the  place  of 
domicile,  the  place  or  places  of  business  in  the  State,  together  with 
the  name  of  agent  or  officer  in  the  State  on  whom  process  may  be 
served,  pp.  253,  254;  L.  1904,  Act  54,  to  carry  into  effect  Const.,  Art. 
264.  They  are  subject  to  law  against  trusts  and  combinations,  p. 
1805.  Fees  are  the  same  as  of  domestic  corporations,  p.  1749;  State 
v.  Warehouse  Co.,  109  La.  64  (1903). 

Penalties  for  Non-Compliance.  Process  may  be  served  on  any 
person  acting  for  such  foreign  corporation,  p.  254. 

Taxation,  Books  and  Reports.  They  are,  generally  speaking,  sub- 
ject to  all  the  laws  and  regulations  of  domestic  corporations  of  the 
various  classes,  and  tax  returns  and  taxes  are  the  same.  p.  1563; 
State  v.  North  American,  etc.,  106  La.  621.  The  Constitution,  how- 
ever, provides  that  foreign  corporations  may  be  taxed  by  a different 
mode  from  that  prescribed  for  domestic  corporations.  Const.,  Art. 
242.  Various  classes  of  foreign  corporations  are  accordingly  sub- 
jected to  a license  tax  on  gross  receipts  at  various  rates  distinct  from 
domestic  corporations,  pp.  1714-1716;  New  Orleans  v.  Ins.  Co.,  106 
La.  31  (1901). 

15.  Combinations  and  Monopolies. 

Are  prohibited  (pp.  1804-6)  on  penalt}'  of  forfeiture  of  charter; 
and  violation  is  declared  a conspiracy  against  trade,  punishable  by 
fine  not  less  than  $100  nor  more  than  $1,000  and  imprisonment  six 
months  to  one  year.  Monopolies  are  declared  misdemeanors,  pun- 
ishable by  fines  not  exceeding  $5,000.  p.  1806;  State  v.  Warehouse  Co., 
109  La.  64  (1903). 


MAINE. 


i.  Corporation  Laws.* 

Constitution.  “Corporations  shall  be  formed  under  the  general 
laws  and  shall  not  be  created  by  special  acts  of  the  Legislature,  except 
for  municipal  purposes  and  in  cases  where  the  objects  of  the  corpor- 
ation can  not  otherwise  be  attained,  and,  however  formed,  they  shall 
be  forever  subject  to  the  general  laws  of  the  State.”  Const.,  Art.  IV, 
Part  3,  § 14. 

Statutes.  The  General  Corporation  Law  is  found  in  the  Revised 
Statutes  of  1903  (in  effect  Jan.  1,  1904),  under  Title  Four.  Under  the 
provisions  of  Chapter  47,  business  corporations  may  be  formed  to 
carry  on  lawful  business  anywhere,  including  navigation  “upon  any 
waters  where  such  corporations  may  navigate.”  Also  corporations 
for  the  construction  and  operation  of  railroads,  and  telegraph,  tele- 
phone, gas  or  electrical  companies,  provided  that  their  functions  are 
to  be  exercised  in  other  states  and  jurisdictions  where  permitted  by 
the  laws  thereof,  and  that  the  articles  of  agreement  and  certificate 
of  organization  so  specify.  Chapters  48  to  60  relate  to  special  incor- 
porations as  follows:  Banks  (Ch.  48);  insurance  (Ch.  49);  bridges 
(Ch.  50);  railroad  (Ch.  51,  52);  street  railroad  (Ch.  53);  navigation 
(Ch.  54);  gas,  electrical,  telegraph  and  telephone  (Ch.  55);  water  and 
aqueduct  (Ch.  56);  library  and  charitable  (Ch.  57);  land,  wharf  and 
real  estate  (Ch.  58);  mills  (Ch.  59);  agricultural  (Ch.  60). 


2.  Taxes  and  Fees. 

Organization  Expenses.  To  Treasurer  of  State  when  capital  stock 
does  not  exceed  $10,000,  $10;  above  $10,000  but  not  exceeding  $500,000, 
$50;  above  $500,000,  $10  for  each  $100,000  thereof.  § 8.  To  Attorney 
General  for  examination  and  approval  of  certificate  of  organization, 
$5.  To  Secretary  of  State,  filing  fee,  $5.  R.  S.,  Ch.  117,  § 17.  To 
Register  of  Deeds  for  recording  certificate  of  organization  and  certify- 
ing copy  of  same,  usually  about  $5. 

All  fees  must  be  paid  in  advance.  The  Treasurer’s  receipt  for 
incorporation  fees  must  be  filed  with  the  Secretary  of  State  before  he 
will  file  charter.  § 8.  (See  “Filing  and  Recording”  under  “Incor- 
poration.”) 

Franchise  Tax.  An  annual  franchise  tax  is  imposed  as  follows: 
On  authorized  capital  stock  not  exceeding  $50,000,  $5;  above  $50,000 
but  not  exceeding  $200,000,  $10;  above  $200,000  but  not  exceeding 

* Except  where  otherwise  noted,  references  are  to  Chapter  47  of  the  Revised 
Statutes,  in  effect  January  1,  1904. 

166 


MAINE. 


167 


$500,000,  $25;  above  $500,000  but  not  exceeding  $1,000,000,  $50,  and  a 
further  sum  of  $25  for  each  $1,000,000  or  any  part  thereof  in  excess 
of  $1,000,000. 

This  tax  is  assessed  by  the  Board  of  State  Assessors  on  or  before 
the  first  day  of  July  in  each  year,  is  certified  by  them  to  the  Secretary 
of  State  and  becomes  due  and  payable  on  the  first  day  of  September 
thereafter.  It  may  be  recovered  by  an  action  of  debt  when  one  month 
in  arrears,  and,  if  one  year  in  arrears,  renders  the  corporate  charter 
liable  to  forfeiture.  R.  S.,  Ch.  8,  §§  18-22. 

Local  Taxation.  Corporations  are  taxed  on  all  real  and  personal 
property  as  are  individuals.  R.  S.,  Ch.  9,  § 16.  Mines  are  exempt  from 
taxation  for  ten  years  from  time  of  opening,  but  are  taxed  on  their 
land  values  and  surface  improvements.  R.  S.,  Ch.  9,  § 6. 

Shares  of  stock  are  taxed  locally  as  personal  property  at  their 
actual  value,  after  deduction  therefrom  of  the  value  of  machinery, 
goods  manufactured  or  unmanufactured,  and  real  estate,  belonging 
to  the  corporation  and  upon  which  it  is  taxed  (R.  S.,  Ch.  9,  § 13), 
except  in  the  case  of  manufacturing,  mining  and  smelting  and  real 
estate  corporations,  paying  taxes  upon  their  property,  in  which  the 
shares  of  capital  stock  are  not  taxed  to  their  owners.  R.  S.,  Ch.  9, 
§§  25,  26. 

General.  On  amendment  of  charter,  $5  must  be  paid  to  Secretary 
of  State  for  certificate  of  change.  R.  S.,  Ch.  117,  § 17.  In  addition, 
on  amendments  increasing  the  capital  stock,  from  $10,000  or  less  to 
not  exceeding  $500,000,  $40  must  be  paid;  if  the  increased  capital  stock 
exceeds  $500,000,  $10  must  be  paid  for  each  $100,000  of  such  increase. 
§ 39.  To  Attorney  General  for  certificate  of  dissolution,  $5.  R.  S.,. 
Ch.  1 17,  § 17. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 6.  No  requirements 
as  to  residence  or  other  qualifications. 

Formation. 

1.  Articles  of  Agreement.  Are  entered  into  and  signed  by 
the  incorporators  for  the  formation  of  the  proposed  corpora- 
tion (§  6),  setting  forth  in  full  the  purposes  of  the  corporation 
and  usually  containing  a waiver  of  notice  of  the  first  meet- 
ing, and  fixing  the  time,  the  place  (in  Maine)  and  the  pur- 
poses thereof. 

2.  First  Meeting  of  Incorporators.  The  incorporators 
meet  at  the  time  and  place  in  the  State  of  Maine  designated 
by  the  Articles  of  Agreement,  or,  if  not  designated  therein, 
pursuant  to  written  waiver  signed  by  all  the  incorporators,  or 
otherwise  the  meeting  is  assembled  by  written  notice  signed 
by  one  of  the  incorporators,  and  served  on  the  incorporators 
personally  or  by  publication  fourteen  days  prior  to  the  time 
appointed  for  such  meeting.  At  such  meeting  the  incor- 
porators, either  in  person  or  by  duly  empowered  attorney, 
organize  into  a corporation,  adopt  a corporate  name,  define 


CLASSIFIED  CORPORATION  LAWS. 


1 68 


the  purposes  of  the  corporation,  fix  the  amount  of  capital 
stock,  which  shall  not  be  less  than  $1,000,  divide  it  into  shares, 
and  elect  not  less  than  three  . directors,  a clerk,  a treasurer 
and  any  other  necessary  officers,  and  adopt  by-laws.  § 7. 

3.  Certificate  of  Organization.  Before  beginning  business 
the  president,  treasurer  and  a majority  of  the  directors  must 
sign  and  make  oath  to  a Certificate  of  Organization  (§  8), 
setting  forth: 

(1)  Name  and  purposes  of  the  corporation. 

(2)  Amount  of  capital  stock. 

(3)  Amount  already  paid  in. 

(4)  Par  value  of  shares. 

(5)  Names  and  residences  of  the  owners. 

(6)  Name  of  the  county  (in  Maine)  where  the  cor- 
poration is  located. 

(7)  Number  and  names  of  directors. 

(8)  Name  and  residence  of  clerk. 

If  any  classification  of  stock  is  desired  it  is  usually  stated 
in  the  certificate  of  organization.  There  are  no  restrictions 
as  to  name,  except  that  the  use  of  the  word  “bank,”  “savings,” 
“trust,”  and  the  like,  is  prohibited  in  any  name  except  of  bank- 
ing corporations.  L.  1903,  Ch.  171.  As  many  purposes  as 
desired  may,  if  allowable  under  the  general  law,  be  included. 
Amount  of  capital  stock  must  not  be  less  than  $1,000.  No 
specified  amount  need  be  paid  in.  Shares  may  be  of  any 
desired  par  value. 

4.  Filing  and  Recording.  After  the  certificate  of  organiza- 
tion has  been  duly  executed,  it  is  submitted  to  the  Attorney 
General  for  approval,  and,  if  in  due  form,  is  so  certified  by 
him.  Fee,  $5.  The  certificate  with  the  Attorney  General’s 
endorsement  must  then  be  recorded  in  the  registry  of  deeds 
in  the  county  where  the  corporation  is  located,  and  the  original 
certificate  and  a copy  certified  by  the  Register  of  Deeds  (fee, 
$5)  must  be  filed  in  the  office  of  the  Secretary  of  State  within 
sixty  days  from  the  date  of  the  first  meeting.  The  Secretary 
of  State  endorses  the  date  of  filing  on  both  certificates,  records 
the  certified  copy  and  returns  the  original  to  the  corporation. 
Fee,  $5.  All  fees  payable  in  advance.  § 8. 

The  Treasurer’s  receipt  for  incorporation  fees  must  be  filed 
with  the  Secretary  of  State  before  this  latter  official  will  file 
the  certificate.  § 8.  (See  “Organization  Expenses.”) 

The  existence  of  corporation  dates  from  time  certificate  is 
filed  in  the  Secretary  of  State’s  office.  § 10. 

4.  Organization. 

First  Meetings.  (See  “Formation”  under  “Incorporation,”  § 2.) 
Must  be  held  within  the  State.  Miller  v.  Ewer,  27  Me.  509;  Freeman 
v.  Machias  Co.,  38  Me.  343.  See  generally  as  to  organization;  Ass’n  v. 
Alexander,  61  Me.  351,  356;  Poor  v.  Willoughby,  64  Me.  381.  Where 
the  incorporators  are  non-residents  and  the  proposed  directors  are 


MAINE. 


169 


also  non-residents,  the  first  meetings  are  usually  held  by  means  of 
dummies  authorized  to  act  by  powers  of  attorney  given  them  by  the 
incorporators.  Through  them  the  permanent  directors  and  officers 
are  elected.  Thereafter  the  board  of  directors  so  elected  may  hold 
their  meetings  and  transact  the  corporate  business  outside  the  State. 
§ 19- 


By-Laws.  Are  to  be  adopted  at  the  first  meeting  of  the  incor- 
porators. § 7.  These  may  provide  for  the  manner  of  calling  and 
conducting  meetings;  the  number  of  members  to  constitute  a quorum; 
the  number  of  votes  to  be  given  by  shareholders;  by  whom  officers, 
except  president  and  directors  (who  must  be  elected  by  the  stock- 
holders), shall  be  elected;  the  tenure  of  the  several  officers;  the  mode 
of  voting  by  proxy,  and  of  selling  shares  for  non-payment  of  assess- 
ments; and  may  be  enforced  by  penalties  not  exceeding  $20.  May 
also  provide  for  classes  and  classification  of  stock  (§§  47,  49),  and 
for  standing  committees.  § 19. 

Election  of  Officers.  The  incorporators  at  their  first  meeting 
elect  not  less  than  three  directors,  a clerk,  a treasurer  and  other 
necessary  officers.  § 7-  Thereafter  the  officers  are  elected  annually 
and  hold  office  until  their  successors  are  chosen  and  qualified  in  their 
stead.  § 19.  (See  “By-Laws.”) 

The  president  is  elected  by  the  directors  out  of  their  number.  Id. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  copy  of  certificate  of  organization 
with  Secretary  of  State.  § 10.  Its  duration  is  not  limited  by  law, 
nor  required  to  be  stated  in  incorporation  papers.  It  continues  for 
three  years  after  expiration  of  the  charter  period  or  dissolution  of  the 
corporation  for  the  purpose  of  closing  up  the  corporate  affairs.  § 77. 

Beginning  Business.  The  corporate  business  may  be  commenced 
forthwith,  and  must  be  commenced  within  two  years.  R.  S.,  Ch.  1, 
§ 6,  XXIX. 

Renewal.  Is  not  provided  for,  the  law  contemplating  perpetual 
existence. 

Forfeiture  of  Charter.  On  failure  to  commence  business  within 
two  years  from  the  date  of  filing  certificate  in  office  of  the  Secretary 
of  State,  the  corporate  charter  is  forfeited  and  becomes  void.  R.  S., 
Ch.  1,  § 6.  Also  the  charter  may  be  forfeited  by  judicial  proceedings, 
on  failure  for  one  year  to  pay  annual  franchise  tax.  R.  S.,  Ch.  8, 
§§  18-22. 

Dissolution  may  be  decreed  by  court  on  quo  warranto,  for  failure 
to  make  returns  as  to  trusts  and  combinations.  §§  53-56;  L.  1889, 
Ch.  266. 

Dissolution.  May  be  had  through  the  courts  (§§  78-83)  by  appli- 
cation of  the  stockholders,  or  involuntarily,  on  quo  warranto  for 
nonfeasance  or  malfeasance.  Reed  v.  Canal,  65  Me.  132;  State  v. 


170 


CLASSIFIED  CORPORATION  LAWS. 


Corp.,  85  Me.  17.  On  application  to  Attorney  General  and  due  proof 
that  the  corporation  has  ceased  to  transact  business,  the  corporation 
will  be  excused  from  making  annual  returns.  § 31.  Appointment  of 
receiver  on  insolvency  is  provided  for.  L.  1905,  Ch.  85. 

6.  Corporate  Powers. 

General.  The  usual  powers  of  corporations  are  enumerated  and 
expressly  conferred.  § 46. 

To  Hold  Property.  The  right  to  hold  property  within  and  with- 
out the  State  is  given  by  express  provision.  § 46. 

Its  Own  Stock.  There  are  no  statutory  provisions  auth- 
orizing a corporation  to  hold  its  own  stock,  though  in  practice  stock 
issued  in  payment  for  property  at  the  time  of  organization  is  fre- 
quently returned  in  part  to  the  corporation  for  its  use.  Shares 
hypothecated  to  the  corporation  can  not  be  voted  at  meetings.  § 17. 

Stock  of  Other  Corporations.  This  power  is  expressly 
and  fully  conferred.  §51;  Franklin  Co.  v.  Institution,  68  Me.  43; 
Ulmer  v.  R.  R.  Co.,  98  Me.  579  (1903). 

To  Borrow  Money.  The  power  to  mortgage  the  corporate  prop- 
erty, within  or  without  the  State,  is  expressly  and  fully  given.  §§  48, 
51.  No  requirement  that  assent  of  stockholders  shall  be  obtained. 
No  limitations  as  to  amount  of  indebtedness. 

To  Do  Business  in  Other  States.  This  power  is  granted  broadly 
(§  48)  as  to  “any  corporate  acts  not  required  to  be  performed  in  the 
State.”  Amendments  of  1903,  Ch.  182.  Directors  may  hold  their 
meetings  out  of  the  State.  § 19. 

Consolidation  or  Merger.  Permitted  by  statute.  Must  be  auth- 
orized by  a majority  vote  of  the  issued  stock.  § 56.  Remedy  of 
minority  stockholders  is  fully  provided.  §§  5 7-67;  Ulmer  v.  R.  R.  Co., 
98  Me.  579  (1903). 

Amendment  of  Charter.  The  statutes  authorize  specifically,  by 
due  affirmative  action  of  a majority  in  interest  of  the  issued  stock, 
the  change  of  the  corporate  name  (§  47),  the  increase  (§  39)  or  de- 
crease of  the  capital  stock  (§  40),  provided  this  latter  does  not  affect 
the  rights  of  creditors  (See  “Capital  Stock”),  the  change  of  the  num- 
ber of  directors  (§  39),  etc.,  and,  indirectly  gives  general  authority 
for  the  amendment  of  the  certificate  of  organization  in  the  following 
provision:  “Whenever  a corporation  shall  make  a change  in  its 

charter  or  certificate  of  organization,  in  any  manner,  for  the  more 
convenient  transaction  of  its  business,  it  shall  forward  a notice  of 
such  change  to  the  Secretary  of  State,  who  shall  record  the  same  in 
a book  kept  for  that  purpose.”  § 45. 

7.  Capital  Stock. 

Amount.  Is  not  to  be  less  than  $1,000.  § 7.  Must  be  stated  in 

the  certificate  of  organization.  § 8. 

Initial  Payment.  Must  be  stated  in  certificate  of  organization 
(§  8),  but  no  statutory  requirements  exist  as  to  amount  or  time  of 
this  first  payment. 


MAINE. 


171 


Consideration  for  Issue.  Must  be  bona  -fide  in  cash  or  in  some 
matter  or  thing  at  a bona  fide  and  fair  valuation  thereof.  § 87;  Libby 
v.  Tobey,  82  Me.  397. 

A corporation  may  issue  stock  in  payment  for  services  rendered 
and  also  for  property  necessary  for  business  and  for  the  stock  of 
other  corporations  owning  property  necessary  for  its  business,  the 
judgment  of  the  directors  as  to  value  to  be  conclusive  in  the  absence 
of  actual  fraud.  § 50. 

Assessments,  not  exceeding  the  amount  originally  limited  for  a 
share,  may  be  made  on  all  shares  subscribed  and  not  paid  for.  The 
method  of  selling  shares  for  failure  to  pay  assessments  may  be  pro- 
vided for  in  the  by-laws.  The  law  provides,  however,  that  after 
default  in  payment  for  thirty  days,  the  treasurer  may  after  prescribed 
notice  sell  at  public  auction  a sufficient  number  of  the  shares  to  pay 
the  amount  due  with  incidental  charges.  §§  37,  38. 

Increase  or  Decrease.  The  capital  stock  may  be  increased  by  a 
majority  vote  of  the  issued  stock.  A certificate  thereof  must  be  filed 
with  the  Secretary  of  State  within  ten  days  thereafter.  § 39.  It  may 
be  decreased  by  a majority  vote  of  all  the  issued  stock  at  the  annual 
meeting  when  due  notice  thereof  has  been  given,  or  at  a meeting  duly 
called  for  that  purpose,  provided  such  decrease  does  not  affect  or 
prejudice  the  rights  of  creditors.  A certificate  of  such  decrease  must 
be  filed  with  the  Secretary  of  State  within  ten  days  thereafter.  Reduc- 
tion on  account  of  impairment  of  capital  is  permitted.  §§  40-44.  (See 
“Incidental  Expenses”;  also  “Amendment  of  Charter.”) 

Classes  of  Stock.  Every  corporation  may  create  two  or  more 
kinds  of  stock  with  such  classes  and  with  such  designations,  prefer- 
ences and  voting  powers,  or  restrictions  or  qualifications  thereof,  as 
shall  be  fixed  and  determined  in  the  by-laws,  or  by  vote  of  the  stock- 
holders at  a meeting  duly  called  for  the  purpose.  § 49. 

Par  Value  of  Shares.  Is  not  prescribed.  Must  be  stated  in  the 
certificate  of  organization,  and  may  be  changed  by  a majority  vote  of 
the  stock  issued  at  a meeting  called  for  that  purpose.  § 36.  (See 
“Amendment  of  Charter.”) 

Stock  Certificates.  Must  be  signed  by  the  president  or  vice- 
president  and  attested  by  the  cashier,  clerk  or  treasurer  with  the 
corporate  seal  affixed.  The  officers  or  any  of  them  are  forbidden  to 
sign  certificates  in  blank  or  without  knowledge  of  the  apparent  title 
of  the  person  to  whom  they  are  issued.  The  signature  of  a majority 
of  the  directors  may  be  used  in  place  of  the  official  signatures  in  an 
emergency.  § 34. 

Transfer  of  Stock.  Stock  is  transferred  by  assignment  of  certifi- 
cate and  record  of  the  transfer  on  the  books  of  the  corporation,  but 
delivery  of  the  fully  assigned  certificate  to  a bona  dde  purchaser  is  a 
valid  transfer  as  against  all  parties  save  the  corporation.  § 34.  Trans- 
fers are  not  valid  as  against  the  corporation  until  entered  on  the 
corporate  books  or  until  a new  certificate  is  issued  the  transferee.  § 35. 

8.  Stockholders. 


Rights  and  Powers.  The  stockholders  have  full  and  sole  control 
of  the  by-laws.  All  amendments  of  the  charter  must  be  made  by 


172 


CLASSIFIED  CORPORATION  LAWS. 


them.  No  lease,  sale  or  other  disposition  of  the  corporate  franchises 
may  be  made  save  with  the  duly  expressed  assent  of  a majority  of 
its  stockholders,  but  dissenting  stockholders  may,  by  proper  proceed- 
ings, compel  the  corporation  to  pay  the  value  of  their  shares.  §§  56-67. 

Liability.  The  stockholders  are  liable  for  corporate  debts  to  the 
extent  of  amounts  withdrawn  or  subscriptions  not  paid  in  (§  86),  and 
payments  of  subscriptions  must  be  bona  fide;  but  the  judgment  of  the 
directors  as  to  value  when  payment  is  made  in  property  or  services 
is  conclusive  in  the  absence  of  actual  fraud  (§  50),  and  the  stock- 
holders are  liable  only  for  debts  contracted  during  their  ownership  of 
unpaid  stock.  Proceedings  for  the  recovery  of  such  debt  must  be 
begun  during  the  ownership  of  such  stock  or  within  one  year  of  its 
transfer  as  shown  by  the  corporate  books.  Stockholders  are  not 
liable  for  mortgage  indebtedness  of  the  corporation.  § 89.  Pro- 
vision is  made  for  actions  in  equity  to  enforce  individual  liability. 
§§90-96;  Libby  v.  Tobey,  82  Me.  397;  Pulcifer  v.  Greene,  96  Me.  438 
(1902);  Hale  v.  Cushman,  96  Me.  148  (1902). 

Meetings.  Stockholders’  meetings  must  be  held  in  the  State.  § 12. 

Notice.  Is  to  be  pro-vided  for  by  by-laws.  § 47.  But  when  all  the 
members  are  present  in  person  or  by  proxy,  meetings  may  be  held 
on  their  written  consent  duly  entered  on  the  record.  § 16.  Three 
members  may  apply  to  a justice  of  the  peace  for  a warrant  to  one  of 
them  to  call  meeting.  If  publication  of  notice  be  required,  the  justice 
should  name  the  newspaper  in  his  warrant.  §§  12,  13. 

Quorum.  Should  be  prescribed  by  the  by-laws.  § 47.  Ellsworth 
Co.  v.  Faunce,  79  Me.  440;  Castner  v.  Co.,  91  Me.  524. 

Voting.  The  statutes  make  no  direct  provision,  but  state  that 
the  by-laws  may  provide  the  number  of  votes  to  be  given  by  share- 
holders. It  is  therefore  usual  to  provide  in  the  by-laws  that  each 
stockholder  shall  be  entitled  to  one  vote  for  each  share  of  stock 
standing  in  his  name  on  the  books  of  the  corporation.  If  cumulative 
voting  is  desired  it  must  be  provided  for  in  the  by-laws.  § 47.  (See 
“ By-Laws,”  under  § 4.)  Pledgees  of  stock  do  not  vote.  § 18. 

Proxies.  Stockholders  may  be  represented  by  proxies  granted 
not  more  than  thirty  days  before  the  meeting,  which  are  invalid  after 
final  adjournment  of  the  meeting.  They  may  be  represented  by  a 
general  power  of  attorney  produced  at  meetings,  until  such  power  is 
revoked.  § 17. 

9.  Directors. 

General.  Directors  must  be  elected  by  the  stockholders,  and 
hold  office  until  their  successors  are  elected  and  qualify,  and  may  be 

divided  into  classes  and  elected  for  a longer  term  than  one  year  by 

proper  provision  in  the  by-laws.  § 19. 

Number.  Must  be  not  less  than  three.  § 7.  No  maximum  limit. 

Number  of  directors  may  be  changed  by  a majority  vote  of  the  issued 
stock;  certificates  thereof  to  be  filed  with  the  Secretary  of  State  within 
ten  days  thereafter.  § 39. 

Qualifications.  Directors  must  be  stockholders.  No  director  can 
hold  office  after  he  ceases  to  be  a stockholder.  § 19.'  No  requirements 
as  to  residence. 


MAINE. 


173 


Powers.  Usual  powers.  No  statutory  provisions. 

Liability.  For  voting  a dividend  to  the  prejudice  of  corporate 
debts,  directors  are  subject  to  a fine  not  exceeding  $2,000,  and  impris- 
onment of  not  less  than  a year,  and  are  also  liable  to  the  extent  of 
such  dividend  to  the  creditors.  § 32. 

Division  of  capital  before  all  debts  are  paid,  and  except  to  close 
the  corporate  concerns,  is  forbidden  (§  88);  and  a judgment  creditor’s 
action  in  equity  is  provided  for,  to  enforce  personal  liability  against 
the  persons  guilty  of  violation.  §§  89-96. 

Meetings.  May  be  held  without  the  State.  § 19.  Notice  is  not 
provided  for  by  statute.  Should  be  prescribed  in  by-laws.  Unless 
otherwise  provided  by  the  by-laws,  a quorum  must  be  a majority. 
Peirce  v.  Co.,  94  Me.  406. 


10.  Officers. 

General.  Officers  may  be  elected  at  the  first  meeting  of  the 
incorporators,  and  thereafter  by  the  directors,  unless  otherwise  pro- 
vided in  the  by-laws.  § 47.  These  officers  are  a president,  who 
must  be  a director  and  is  elected  by  the  directors  (§  19),  and  a clerk 
who  must  be  a resident  of  the  State  (§  20),  a treasurer  and  other  neces- 
sary officers.  § 19.  The  treasurer  must  file  a bond;  the  clerk  must 
be  sworn  and  must  keep  a record  of  all  votes.  § 19.  Officers  are  to 
be  elected  annually,  but  on  failure  of  election  hold  office  until  their 
successors  are  chosen  and  qualify.  Clerk  must  file  certificate  of  his 
election  within  twenty  days  after  accepting  the  office,  in  the  registry 
of  deeds  of  the  district  in  which  the  company  is  located  (§  22),  and  his 
resignation  must  be  likewise  filed.  § 23. 

Liability.  For  preventing  access  to  the  corporate  books  as  pro- 
vided by  law,  officers  are  liable  for  all  damages  occasioned  thereby. 
§ 21.  For  neglect  to  file  annual  reports,  the  officers  guilty  forfeit  $500. 
§ 30.  (See  “Corporate  Books.”) 

11.  Principal  Office. 

An  office  must  be  maintained  at  some  fixed  place  within  the 
State,  in  charge  of  a clerk  who  keeps  the  corporate  records.  § 20. 

May  be  changed  from  one  county  of  the  State  to  another  by  a 
majority  vote  of  the  stock  issued  at  any  legal  meeting,  and  on  filing 
certificate  thereof  within  twenty  days  after  the  change,  in  the  registry 
of  deeds  in  each  of  said  counties.  §§  22,  52. 

12.  Corporate  Books. 

What  Required.  A book  showing  a true  and  complete  list  of  all 
stockholders,  their  residences  and  the  amount  of  stock  held  by  each; 
also  a record  showing  all  votes  of  the  corporation.  The  stock  book 
is  competent  evidence  as  to  who  are  stockholders  and  the  amount  of 
stock  held  by  each.  § 20. 

Where  Kept.  To  be  kept  at  the  clerk’s  office  within  the  State, 


174 


CLASSIFIED  CORPORATION  LAWS. 


(Maine) 

except  as  to  corporations  doing  business  in  the  State  and  having  a 
treasurer’s  office  therein,  which  may  keep  the  stock  book  at  such 
office.  §20. 

Examination  of.  Such  record  and  stock  books  shall  be  open  at  all 
reasonable  hours  to  the  inspection  of  persons  interested,  who  may 
take  copies  and  minutes  therefrom  of  such  parts  as  concern  their 
interests.  §§  20,  21. 

The  books  are  also  open  to  tax  assessors  as  to  records  of  stocks 
and  dividends  paid  thereon,  on  penalty  of  $500  fine.  Manufacturing 
companies  are  exempted  from  this  provision.  R.  S.,  Ch.  9,  § 31. 

13.  Reports. 

Every  corporation  for  profit,  except  those  organized  under  Chap- 
ter 57  of  the  Revised  Statutes,  and  such  other  corporations  as  are  liable 
to  a franchise  tax  other  than  the  tax  provided  for  in  § 18  of  Chapter  8 
of  the  Revised  Statutes  (See  “Franchise  Tax”),  or  unless  excused 
therefrom  on  account  of  non-user  of  franchise  (§  31),  must  annually 
on  or  before  June  1st,  file  in  the  office  of  the  Secretary  of  State,  a 
return  signed  and  verified  under  oath  by  its  president  and  treasurer, 
containing  the  names  and  residences  of  its  directors,  president,  treas- 
urer and  clerk,  the  location  of  its  principal  office,  and  the  amount 
of  its  authorized  capital  stock.  Blank  forms  are  furnished  by  Secretary 
of  State.  § 26.  Penalty  for  non-compliance,  a fine  of  $500  and  costs 
to  the  State.  § 27. 

State  officers  are  charged  with  certain  duties,  to  ascertain  and 
prosecute  delinquent  corporations,  and  in  1903,  a special  law  was 
passed  (Ch.  235)  to  further  enforce  this  and  appropriating  a fund  for 
expenses;  also  the  Laws  of  1903  (Ch.  235)  provide  a further  penalty 
of  $300. 

Directors  of  corporations  doing  business  in  the  State  must  send 
to  the  librarian  of  the  State  Library,  copies  of  all  printed  reports 
relating  to  the  affairs  of  the  corporation.  R.  S.,  Ch.  3,  § 15. 

Affidavits  as  to  trusts  and  combinations  are  also  required  to  be 
made  on  request  of  Secretary  of  State.  L.  1889,  Ch.  266. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  statutory  requirements  to 
be  complied  with.  Foreign  corporations  are  permitted  to  sue  and  be 
sued,  and  may  act  by  agents  the  same  as  non-resident  persons  (R.  S., 
Ch.  7,  § 76);  but  they  are  subject  to  the  laws  of  the  State.  Dryden  v. 
R.  R.  Co.,  60  Me.  512;  Cousins  v.  Lovejoy,  81  Me.  467;  State  v.  R.  N.  T. 
Co.,  73  Me.  518.  Their  property  is  attached  as  that  of  non-residents. 
§ 76. 

Taxation.  No  annual  franchise  tax  is  imposed  on  foreign  cor- 
porations. They  are  taxed  locally  on  their  real  and  personal  property 
in  the  State. 

15.  Combinations  and  Monopolies. 

These  are  prohibited  in  general  terms  (L.  1889,  Ch.  266),  under 
penalties  of  fine  of  not  less  than  $5, 000  nor  more  than  $10,000;  viola- 
tion being  declared  a misdemeanor. 


MARYLAND. 

Enactments  of  1906. 


1.  Corporation  Laws. 

Statutes.  Section  16,  Art.  XXIII  of  the  Public  General  Laws, 
1904,  is  amended  by  adding  to  the  purposes  for  which  corporations 
may  be  formed,  “ poultry  associations  for  the  purpose  of  dealing  in 
eggs,  increase  of  poultry  and  other  things  connected  with  poultry 
farming.”  L.  1906,  Ch.  722,  p.  1211. 

2.  Taxes  and  Fees. 

Franchise  Tax.  A franchise  or  gross  receipts  tax  to  be  paid  on 
gross  earnings  has  been  imposed  on  certain  corporations  as  follows: 
On  railroad  companies  at  the  rate  of  i1A%  on  first  $1,000  earned  per 
mile,  2%  on  second  thousand,  and  2 y2%  on  any  excess;  on  telegraph, 
express,  pullman  car,  safe  deposit  and  trust  companies  at  the  rate  of 
2y2 % on  total  gross  earnings;  on  telephone,  oil  pipe  lines,  guarantee 
and  title  insurance  companies  at  the  rate  of  2%;  on  electric  light  com- 
panies at  rate  of  1%;  on  electric  construction,  gas,  guano,  phosphate  or 
fertilizer  companies  at  rate  of  1 %%.  Foreign  corporations  doing 
business  in  State  are  taxed  at  same  rate.  L.  1906,  Ch.  712,  p.  1196. 

Local  Taxation.  Stock  corporations  having  investments  in  stock 
debt,  etc.  of  Maryland  or  Baltimore  or  in  stock  of  any  corporation  on 
which  taxes  are  already  paid  may  deduct  same  from  corporate  pro- 
perty subject  to  taxation.  Certain  new  issues  of  stock  debt  are 
excepted.  This  amendment  is  not  to  affect  any  pending  litigation. 
L.  1906,  Ch.  467,  p.  897. 

6.  Corporate  Powers.  , 

To  Hold  Property.  The  provisions  of  Section  22 7,  Art.  XXIII 
of  Public  General  Laws,  J904,  are  amended  and  now  prohibit  mining 
companies  from  holding  more  than  1,500  acres  in  Garrett  County, 
more  than  1,000  acres  in  Alleghany  County  and  more  than  500  acres 
in  any  other  county.  A majority  in  interest  of  the  stockholders  of 
such  companies  shall  constitute  a quorum  at  any  meeting.  The 
capital  stock  of  mining  companies  shall  not  exceed  $3,000,000.  L.  1906, 
Ch.  178,  p.  259. 

Criminal  Process  against  Corporations.  In  case  of  indictment 
against  corporation,  the  Attorney  General  may  serve  process  as  in 
civil  suits.  On  sheriff’s  return  the  corporation  shall  be  deemed 
in  court.  Clerk  of  court  may  plead  not  guilty  for  corporation  and 
criminal  trial  may  follow.  Execution  shall  issue  for  fine  and  costs. 
L.  1906,  Ch.  403,  p.  729. 

15.  Combinations  and  Monopolies. 

Gas  companies  may  consolidate  to  give  cheaper  and  better  service 
by  one  company  leasing  another  or  owning  stock  therein.  L.  1906,  Ch. 
167,  p.  231. 


MARYLAND. 


1.  Corporation  Laws.* 

Constitution.  (1867.)  Corporations  not  to  be  created  by  special 
act  when  they  may  be  created  under  general  laws.  Art.  Ill,  § 48. 
State  credit  not  to  be  loaned  to  a corporation.  Id.,  § 34.  Revenues 
of  foreign  corporations  to  be  taxed.  Id.,  § 58.  Monopolies  to  be  pro- 
hibited. Declaration  of  Rights,  § 41. 

Statutes.  The  general  corporation  law  is  found  in  the  Public 
General  Laws  of  Maryland  (1904),  Article  XXIII,  of  which  §§  1-112 
and  360-417  contain  general  provisions.  The  intervening  sections  re- 
fer specially  to  bridge,  building  and  homestead,  cemetery,  gas  and 
electric,  insurance,  manufacturing,  mining,  railroad,  religious,  tele- 
graph and  telephone,  water,  trust  and  surety,  turnpike,  co-operative 
and  fraternal  corporations.  §§  137-141  relate  to  foreign  corporations. 
Article  XI  treats  of  banks. 

Twenty-eight  classes  of  corporations  are  enumerated  and  au- 
thorized by  §§  15-43,  including  corporations  for  manufacturing,  me- 
chanical, industrial  and  chemical  pursuits  and  the  sale  of  their  pro- 
ducts (§  21,  Class  6);  also  mercantile  corporations.  § 24,  Class  9. 
Two  or  more  purposes  may  be  combined.  § 44. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer:  A bonus  or  or- 

ganization tax  of  one-eighth  of  one  per  cent,  of  the  authorized  capital 
stock.  Art.  81,  § 98. 

To  Clerk  of  Court:  For  filing  certificate  of  incorporation,  $5; 

seal,  10  cents;  recording  and  for  copies,  10  cents  per  folio.  Art.  36, 
§12. 


Franchise  Tax.  None  imposed.  An  annual  tax  of  one-eighth  of 
one  per  cent,  of  the  capitalization  is,  however,  required  of  any  busi- 
ness corporation  that  does  not  commence  business  within  two  years 
of  the  time  of  its  incorporation.  This  tax  ceases  as  soon  as  the  cor- 
porate operations  are  actually  begun.  § 109. 

Local  Taxation.  A State  tax  is  imposed  on  the  property  value 
of  the  capital  stock.  This  tax  is  fixed  by  the  State  Board  according 
to  the  value  of  corporate  property,  which  is  thereby  exempt  (§  4), 
and  is  payable  on  the  second  day  of  January.  It  is  paid  by  the  cor- 

* References,  except  where  otherwise  noted,  are  to  Public  General  Laws  (1904), 
Article  XXIII. 


175 


176 


CLASSIFIED  CORPORATION  LAWS. 


poration  and  may  be  collected  from  the  stockholders.  Art.  81,  §§  87, 
159.  Delinquent  taxes  bear  interest  at  the  rate  of  5 per  cent,  per 
annum.  Id.,  § 93. 

Tax  returns  are  to  be  made  by  March  1st  of  each  year.  Id., 
§§  156-159,  161,  162.  President  must  file  copy  of  certificate  of  incor- 
poration certified  by  court  clerk  in  office  of  State  Tax  Commissioner 
under  penalty  of  $50  fine.  Id.,  § 154. 

General.  On  increase  of  capital  stock  a fee  of  one-eighth  of  one 
per  cent,  of  the  amount  of  increase  must  be  paid  State  Treasurer. 
Art.  81,  § 98. 

3.  Incorporation. 

Incorporators.  Must  be  five  or  more,  citizens  of  the  United 
States,  a majority  of  whom  are  citizens  or  residents  of  the  State. 
Unnaturalized  residents  may  become  incorporators  by  making  affi- 
davit of  their  bona  fide  intention  to  become  citizens  without  unreason- 
able delay.  § 14. 

Certificate  of  Incorporation.  Must  be  signed,  sealed  and  ac- 
knowledged by  each  of  the  incorporators,  and  must  state  (§  50) : 

(1)  Full  names  and  addresses  of  the  applicants. 

(2)  Proposed  corporate  name,  which  must  include  the 
name  of  the  county  or  city  in  which  it  may  be  formed. 

(3)  Object  or  purposes  for  which  incorporation  is  sought. 

(4)  Time  of  existence,  not  to  exceed  forty  years,  and  the 
articles,  conditions  and  provisions  under  which  the  corpor- 
ation is  formed. 

(5)  Place  or  places  where  operations  are  to  be  carried 
on,  and  location  of  principal  office  in  the  State. 

(6)  Amount  of  capital  stock.  No  limitations  except  as  to 

mining  companies,  which  may  not  exceed  $3,000,000.  § 227. 

(7)  Number  and  par  value  of  shares  of  stock.  Par  value 
may  be  any  desired  amount. 

(8)  Number  of  trustees,  directors  or  managers  and  names 
of  those  to  serve  for  the  first  year. 

Filing  and  Recording.  This  certificate  is  submitted  to  one  of  the 
judges  of  the  judicial  circuit  within  which  the  principal  or  any  office 
of  the  corporation  is  to  be  located,  or  if  in  Baltimore,  to  one  of  the 
judges  of  the  Supreme  Bench  in  Baltimore.  If  approved,  the  judge 
certifies  such  approval  on  the  certificate  and  it  is  thereupon  recorded 
in  the  office  of  the  clerk  of  the  circuit  court  for  the  county  in  which 
the  principal  office  is  to  be  located;  or  in  the  office  of  the  clerk  of 
Superior  Court  of  Baltimore,  if  located  in  that  city.  §§  51,  52. 

4.  Organization. 

First  Meetings.  Of  stockholders  must  be  held  within  the  State. 
§ 65.  There  are  no  special  regulations  as  to  first  meetings  of  either 
stockholders  or  directors. 


MARYLAND. 


177 


By-Laws.  May  be  adopted  for  the  management  of  the  corporate 
property,  regulation  of  affairs,  transfer  of  stock,  and  for  forfeiture 
of  delinquent  stock  and  disposition  of  proceeds  thereof;  for  calling 
regular,  special  and  general  meetings  of  directors,  and  fixing  time 
and  place  or  places  for  holding  the  same.  The  by-laws  may  be 
amended  by  the  directors,  such  amendments  to  be  confirmed  by  stock- 
holders at  regular  or  annual  meeting,  and  to  cease  to  be  in  force  after 
next  annual  meeting  unless  so  confirmed.  § 63;  Darrin  v.  Hoff,  99 
Md.  491  (1904). 

Certificates.  Before  transacting  any  corporate  business,  the  presi- 
dent of  the  corporation  must  file  a copy  of  the  certificate  of  incor- 
poration, certified  by  the  clerk  of  court  in  whose  office  the  original 
is  filed,  and  recorded  in  the  office  of  the  State  Tax  Commissioner,  on 
penalty  of  fine  of  $50.  Art.  81,  § 154. 

5.  Corporate  Existence. 

When  Commenced.  On  recording  certificate  of  incorporation. 
§ 53.  Is  not  to  exceed  forty  years.  §§  50,  55. 

Beginning  Business.  May  not  be  commenced  until  certified  copy 
of  certificate  of  incorporation  has  been  filed  with  State  Tax  Com- 
missioner. Art.  81,  § 154.  Unless  begun  within  two  years  a franchise 
tax  must  be  paid.  Corporate  powers  are  suspended  during  delin- 
quency in  payment  of  tax.  § 107. 

Renewal.  No  statutory  provisions. 

Forfeiture  of  Charter.  For  misuse,  abuse  or  non-use  of  cor- 
porate powers,  or  for  failure  to  pay  bonus  for  two  years,  Attorney 
General  may  institute  proceedings  to  annul  the  franchise  (§§  368-375), 
and  in  any  such  case  on  application  of  any  citizen,  the  Governor  may 
direct  Attorney  General  to  secure  injunction  against  further  exercise 
of  corporate  powers.  § 376. 

Dissolution.  May  be  authorized  by  a majority  vote  at  a duly 
called  meeting.  Petition  embodying  the  vote  and  reasons  with  state- 
ment of  the  assets,  books,  capital  stock,  stockholders  and  liabilities, 
is  presented  to  circuit  court  which  has  discretionary  power  to  grant 
dissolution  and  appoint  receiver.  §§  378-381.  If  capital  stock  is  not 
paid  in  within  four  years  from  date  of  incorporation,  corporation 
may  be  dissolved.  § 72. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  §§  58-63. 

To  Hold  Property.  Is  permitted  to  the  extent  of  corporate  ne- 
cessities. § 61.  Mining  companies  may  not  hold  more  than  1,000 
acres  of  land  in  Alleghany  County,  nor  more  than  500  in  any  other 
county.  § 227. 

Its  Own  Stock.  No  statutory  provision. 

Stock  of  Other  Corporations.  “One  corporation  may 
own  stock  of  another  without  express  authority  to  do  so,  unless  such 


178 


CLASSIFIED  CORPORATION  LAWS. 


dealing  is  expressly  prohibited,  or  the  nature  of  the  business  renders 
it  improper.”  Davis  v.  Co.,  77  Md.  35  (1893).  An  officer  voting  stock 
held  in  another  corporation  may  be  required  to  make  oath  that  he 
fairly  represents  the  sentiments  of  a majority  of  the  directors  of  the 
holding  corporation.  § 10. 

To  Borrow  Money.  Debts  must  not  exceed  capital  stock.  § 83; 
Heironimus  v.  Sweeney,  83  Md.  146  (1896). 

To  Do  Business  in  Other  States.  The  place  of  doing  business  of 
the  enumerated  classes  of  business  is  generally  limited  to  the  State 
of  Maryland,  but  certain  businesses  may  be  carried  into  adjoining 
states.  § 30.  Unless  expressly  permitted,  however,  such  power  is 
not  recognized  by  the  Maryland  courts.  Smith  v.  M’g.  Co.,  64  Md.  85. 

Consolidation  or  Merger.  Two  corporations  whose  capital  stock 
has  been  fully  paid  up,  and  formed  in  whole  or  in  part  for  the  same 
purpose,  may  by  due  procedure  unite  and  form  a new  corporation. 
The  assent  of  a majority  of  the  stock  of  both  corporations  is  re- 
quired. §§  45,  46. 

Amendment  of  Charter.  Except  as  otherwise  expressly  provided, 
amendments  may  be  adopted  by  a majority  vote  of  the  stock  and 
must  be  signed,  sealed  and  acknowledged  and  recorded  in  the  same 
manner  as  original  certificate.  § 55.  (See  under  § 7,  “Increase  or 
Decrease.”) 

7.  Capital  Stock. 

Amount.  Unlimited  except  as  to  mining  companies,  which  may 
not  exceed  $3,000,000.  § 227. 

Initial  Payment.  One-fourth  the  capital  stock  must  be  paid  in 
within  one  year  from  date  of  the  incorporation.  § 72. 

Consideration  for  Issue.  May  be  land  or  other  property  at  a 
valuation  agreed  upon  between  the  corporation  and  the  subscriber, 
and  on  authority  by  the  stockholders  assembled  in  general  meeting 
pursuant  to  call  to  consider  the  propriety  of  receiving  such  subscrip- 
tion and  fixing  the  terms  on  which  it  is  to  be  received.  The  property 
must  be  proper  for  the  advancement  of  the  corporate  purposes  (§  69) 
and  the  corporate  books  must  show  all  the  facts.  § 70.  Assessments 
on  subscriptions  may  be  made  at  discretion  of  directors.  § 78. 

One-fourth  the  capital  stock  must  be  paid  within  one  year  of  the 
date  of  incorporation,  one-fourth  in  two  years,  one-fourth  in  three 
years,  and  the  remainder  in  four  years,  or  the  corporation  may  be 
dissolved.  § 72. 

Within  thirty  days  after  payment  of  the  last  instalment  on  the 
capital  stock  the  president  and  a majority  of  the  directors  must  file 
a statement,  sworn  to  by  the  president,  showing  amount  of  capital 
and  amount  paid  in,  all  property  received  in  payment  of  subscriptions 
.and  the  extent  to  which  payments  have  been  made  in  property. 
This  certificate  must  be  filed  with  the  clerk  of  the  court  where  original 
articles  were  recorded.  § 73- 

Increase  or  Decrease.  May  be  effected  by  a vote  of  two-thirds 
of  the  stock  at  a meeting  called  for  that  purpose,  on  notice  pre- 


MARYLAND. 


179 


scribed  by  the  statutes.  §§  82-85.  A certificate  thereof  in  form  pre- 
scribed by  the  statute  is  signed  by  the  chairman  of  the  meeting, 
sworn  to  by  the  president  and  recorded  in  the  clerk’s  office  where  the 
principal  office  is  located.  § 86.  Reduction  of  stock  to  true  value 
after  losses,  is  provided  for.  §§  87,  88. 

Classes  of  Stock.  Any  corporation  empowered  to  issue  bonds 
may  instead  issue  preferred  stock  if  authorized  thereto  at  a general 
meeting  of  the  stockholders.  An  agreement  therefor  must  be  exe- 
cuted and  filed  and  recorded  as  were  the  original  articles.  Six  per 
cent,  must  be  guaranteed  out  of  profits  and  such  preferred  stock  has 
preference  over  any  subsequent  mortgage.  § 409. 

Par  Value  of  Shares.  No  limitations.  Is  to  be  specified  in  cer- 
tificate of  incorporation.  § 50.  May  be  changed  by  amendment  to 
conform  to  the  actual  value  of  the  shares.  § 87. 

Stock  Certificates.  Not  prescribed  as  to  form. 

Transfer  of  Stock.  Is  to  be  prescribed  by  the  by-laws,  but  no 
stock  is  transferable  until  all  previous  calls  on  same  have  been  paid, 
or  it  has  been  declared  forfeited  for  non-payment  of  calls.  § 71. 

8.  Stockholders. 

Rights  and  Powers.  A majority  may  call  meetings  (§  6),  remove 
directors  (§  7),  make  amendments  to  charter  (§  55),  dissolve  cor- 
poration (§  378)  and  consolidate.  § 45.  Increase  or  decrease  of 
capital  stock,  etc.,  is  effected  by  a two-thirds  vote.  §§  82,  86,  89. 

Liability.  Stockholders  are  liable  to  the  amount  of  their  unpaid 
subscriptions.  § 72. 

Meetings.  Elections  must  be  held  annually  within  the  State, 
time,  place  and  notice  to  be  prescribed  by  by-laws.  § 65. 

When  notice  is  not  prescribed  by  by-laws  for  annual  meeting, 
it  must  be  published  at  least  ten  days  prior  to  the  meeting  in  a news- 
paper nearest  to  the  place  of  the  principal  office.  §§  6,  65.  Meetings 
may  be  called  by  a majority  of  all  the  stock  on  similar  notice,  but 
published  also  in  a newspaper  in  the  City  of  Baltimore,  and  if  that 
city  is  the  domicile  of  the  corporation,  then  in  two  newspapers  in 
that  city.  § 6. 

Quorum.  Of  mining  companies  is  a majority  in  interest  of  all 
the  stockholders.  § 227.  A quorum  of  business  corporation  may  be 
less  than  majority  (Darrin  v.  Hoff,  99  Md.  491  [1904]),  but,  if  desired, 
should  be  so  provided  in  the  by-laws. 

Voting.  By  ballot,  each  stockholder  having  as  many  votes  as 
he  has  shares  of  stock,  but  the  corporation  may  provide  in  its  charter 
or  by-laws  for  minority  representation.  § 66;  Webb  v.*  Ridgely,  38 
Md.  364  (1873);  Baile  v.  Calvert  College,  47  Md.  117  (1877).  No  stock 
may  be  voted  on  which  assessment  is  unpaid.  § 66.  Votes  may  be 
canvassed  and  oaths  required  to  insure  bona  fide  representation. 
§§  8-n. 

Proxies,  Voting  may  be  in  person  or  by  proxy.  § 65. 


CLASSIFIED  CORPORATION  LAWS. 


180 


9.  Directors. 

General.  A director  or  officer  may  be  removed  by  a majority 
vote  of  the  whole  number  of  stockholders,  at  any  gefieral  meeting. 
§ 7- 


Number.  Must  be  not  less  than  four  nor  more  than  twelve.  § 65. 

Qualifications.  The  directors  must  all  be  citizens  of  the  United 
States  and  a majority  citizens  of  the  State.  Declarations  of  inten- 
tion to  become  a citizen  of  the  United  States  is  sufficient  to  qualify 
a resident  of  the  State.  § 65. 

Powers.  Directors  have  the  usual  general  powers  over  the  cor- 
porate property  and  affairs.  They  also  have  power  to  amend  by-laws 
but  such  amendments  must  be  ratified  by  the  stockholders  at  a regular 
or  annual  meeting  and  if  not  ratified  at  next  annual  meeting,  cease 
to  be  of  force.  § 63. 

Liability.  For  declaring  or  paying  any  dividend  when  the  com- 
pany is  insolvent  or  which  would  render  it  insolvent,  or  would  dimin- 
ish its  capital  stock,  the  assenting  directors  are  jointly  and  severally 
liable  for  all  corporate  debts  then  existing  or  incurred  while  they  re- 
spectively continue  in  office.  § 75.  Objecting  directors  avoid  liability 
by  filing  their  objection  in  writing,  before  payment  of  the  dividend,  in 
the  clerk’s  office  in  which  the  certificate  of  incorporation  was  filed. 
§ 76. 

Meetings.  May  be  regulated  by  the  by-laws.  § 63.  Quorum  is 
a majority.  § 3. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  A president,  who  must  be  a director,  is  prescribed. 
§62.  Also  a secretary  or  a treasurer.  §§80,  81. 

Liability.  For  making  any  loan  to  stockholders,  the  officers  as- 
senting are,  in  the  event  of  insolvency  of  the  corporation,  jointly  and 
severally  liable  for  corporate  debts  contracted  before  such  loan  to 
the  extent  of  double  the  amount  of  any  loss  resulting  from  the  loan. 
§ 77.  For  failure  to  submit  statement  of  assets  and  liabilities  to 
stockholders  on  demand  as  prescribed  by  law,  the  finance  officer  for- 
feits to  the  person  making  such  demand,  $50  and  $25  for  every  twenty- 
four  hours  of  continued  refusal.  § 79. 

Refusal  to  allow  inspection  of  stock  book  is  a misdemeanor.  § 80. 
For.  failure  to  file  certified  copy  of  certificate  of  incorporation  in  Tax 
Commissioner’s  office,  president  is  fined  $50.  Art.  81,  § 154. 

11.  Principal  Office. 

Must  always  be  maintained  in  the  State.  §§  23-25,  27,  29-32,  80. 
If  president  and  a majority  of  the  directors  do  not  reside  in  the  State, 
attachment  lies  against  the  corporation  as  against  a foreign  corpora- 
tion. Art.  9,  § 2. 


MARYLAND. 


181 


12.  Corporate  Books. 

What  Required.  The  president  and  directors  of  every  corpora- 
tion must  keep  full,  fair  and  correct  accounts  of  their  transactions. 
§ 5.  A book  containing  alphabetical  list  of  stockholders  for  three 
years  back,  with  places  of  residence,  number  of  shares  and  date  they 
became  owners,  is  prescribed.  § 80. 

Where  Kept.  Stock  book  is  to  be  kept  at  principal  office  in  the 
State.  § 80. 

Examination  of.  The  corporate  books  shall  be  open  during  busi- 
ness hours  to  the  inspection  of  stockholders.  § 5.  Stock  book  is  to 
be  open  to  inspection  of  stockholders  and  creditors  during  usual  hours 
of  every  business  day,  on  penalty  of  $50  to  the  party  injured  and  re- 
sulting damages.  §80;  Weihenmayer  v.  Bitner,  88  Md.  325  (1898). 

Any  person  owning  5 per  cent,  of  the  capital  stock  may  obtain 
from  the  treasurer  or  chief  finance  officer  . on  written  request,  a state- 
ment of  the  affairs  of  the  corporation,  under  oath,  embracing  a par- 
ticular account  of  all  its  assets  and  liabilities  in  minute  detail;  such 
statement  to  be  furnished  within  twenty  days  from  presentation  of 
such  written  request  and  a copy  to  be  kept  on  file  for  six  months 
thereafter  for  exhibition  during  business  hours  to  any  stockholder  on 
demand.  § 79. 

Whether  requested  or  not  such  a statement  must  be  made  on  the 
first  week  of  January  and  July  of  each  year,  verified  by  the  president 
and  treasurer  or  chief  finance  officer  and  kept  on  record  in  the  prin- 
cipal office  in  the  State.  § 81. 

13.  Reports. 

Tax  returns  are  required.  These  are  varied’  and  specific  for 
various  purposes  or  classes  of  corporations.  Art.  81,  §§  147-162. 

The  president  and  directors  shall  annually  prepare  a full  and  true 
statement  of  the  affairs  of  the  corporation,  to  be  certified  by  the  presi- 
dent and  secretary  and  submitted  at  the  annual  meeting.  § 5. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Any  foreign  corporation  de- 
siring to  transact  business  in  the  State,  must  file  a certified  copy  of 
its  charter,  together  with  a statement  sworn  to  by  the  president  or 
chief  executive  officer  under  official  seal,  setting  forth  the  authorized 
capital  stock,  amount  actually  issued,  amount  of  assets  and  liabilities, 
and  the  character  of  business  to  be  transacted  in  the  State;  and  also 
designating  the  principal  office  or  offices  in  the  State,  and  the  name 
and  address  of  agent  or  agents  to  reside  in  the  State  on  whom  process 
may  be  served.  A fee  of  $25  must  also  be  paid.  The  Secretary  of 
State  records  the  charter  and  statement  and  issues  certificate  of  au- 
thority. §§  137,  138. 

Penalties  for  Non-Compliance.  Any  agent  or  officer  attempting 
to  carry  on  business  without  compliance,  forfeits  to  the  State  $100 
for  each  day  he  so  acts,  and  the  corporation  can  maintain  no  action 
at  law  or  in  equity  in  the  State  courts.  §§  139,  140. 


1 82 


CLASSIFIED  CORPORATION  LAWS. 


(Maryland) 

Taxation.  Constitution  provides  for  taxation  of  revenues  of  for- 
eign corporations.  Art.  Ill,  § 58.  Taxes  on  gross  receipts  with  special 
returns,  filing  charters,  etc.,  with  State  Tax  Commissioners,  are  ac- 
cordingly imposed.  L.  1890,  Ch.  608. 

Books.  No  statutory  requirements. 

Reports.  Tax  returns  of  special  corporations  are  required.  Art. 
81,  §§  147-162. 

Attachments  Against.  Lie  on  the  ground  of  being  a foreign  cor- 
poration. §411;  Art.  9,  § 2. 

15.  Combinations  and  Monopolies. 

Monopolies  are  odious,  contrary  to  the  spirit  of  free  government 
and  the  principles  of  commerce,  and  ought  not  to  be  suffered.  Declar- 
ation of  Rights,  § 41. 


MASSACHUSETTS. 

Enactments  of  1906. 


1.  Corporation  Laws. 

Statutes.  Section  7 of  Ch.  437,  Acts  of  1903,  has  been  amended 
by  striking  out  “ or  to  distil  or  manufacture  intoxicating  liquors  ” so 
that  there  is  now  no  prohibition  against  the  formation  of  corporations 
for  such  purposes  under  the  general  law.  Acts  1906,  Ch.  286,  p.  249. 

6.  Corporate  Powers. 

General.  The  Supreme  Judicial  Court  on  information  of  the 
Attorney  General  at  relation  of  the  Commissioner  of  Corporations  is 
given  power  to  enjoin  corporations  from  exercising  any  franchise,  or 
privilege,  or  from  transacting  any  kind  of  business  not  authorized  by 
their  charters  and  the  laws  of  the  State.  Acts  1906,  Ch.  372,  p.  346. 

13.  Reports. 

Section  49  of  Ch.  437,  Acts  of  1903,  has  been  amended  as  follows: 

Upon  failure  to  file  annual  report  thirty  days  after  annual  meeting 
or  final  adjournment  thereof,  or  to  make  tax  return  before  May  10th 
of  each  year,  the  Commissioner  of  Corporations  shall  notify  the  delin- 
quent corporation  by  mail.  Upon  any  such  failure  continuing  thirty 
days  after  notification,  a forfeit  penalty  is  imposed  of  not  less  than  $5 
nor  more  than  $10  each  day  for  the  first  fifteen  days  after  expiration  of 
the  notification  period,  and  thereafter  of  not  less  than  $10  nor  more 
than  $200  for  each  day,  or  any  other  sum  not  greater  than  the  maxi- 
mum penalty  that  the  court  may  deem  just  and  equitable.  Upon  failure 
to  file  report  for  two  years  the  Commissioner  may  apply  to  the 
Supreme  Judicial  Court  which  may  decree  dissolution.  Acts  1906, 
Ch.  346,  p.  317. 

14.  Foreign  Corporations. 

Penalties  for  Non-Compliance.  Section  68,  Ch.  437,  Acts  of  1903, 
is  amended  as  follows: 

If  a foreign  corporation  (of  the  classes  described  in  Sec.  58)  fails 
to  file  the  certificate  required  by  Sec.  66,  the  Commissioner  shall  give 
notice  by  mail,  as  provided  in  Sec.  59,  to  its  resident  manager  or  other 
person  designated  to  receive  process.  Failure  for  thirty  days  entails 
penalties  as  for  domestic  corporations,  as  set  forth  in  amended  Section 
49.  (See  “Reports”  above.)  Acts  1906,  Ch.  346,  p.  318. 

The  Supreme  Judicial  Court  on  information  of  Attorney  General 
at  relation  of  Commissioner  of  Corporations  may  restrain  any  foreign 
corporation  by  injunction  from  exercising  any  corporate  rights, 
privileges  or  franchises  in  the  State  until  it  has  appointed  an  attorney 
on  whom  process  may  be  served  and  filed  certificate,  etc.,  as  pre- 


MASSACHUSETTS. 


scribed  in  Sections  58  and  60  of  Ch.  437  of  1903.  Acts  1906,  Ch.  372, 
P-  346. 

Trustee  Process.  In  an  action  by  trustee  process  in  which  a for- 
eign corporation  having  a usual  place  of  business  in  the  State  is 
designated  as  trustee,  service  on  the  . treasurer  or  other  officer  of  the 
corporation  shall  be  of  the  same  effect  and  validity  as  if  made  on  the 
Commissioner  of  Corporations.  Acts  1906,  Ch.  269,  p.  232. 

15.  Combinations  and  Monopolies. 

Consolidation  or  Merger.  Gas  or  electric  light  corporations  shall 
not  by  any  consolidation  increase  their  aggregate  stock  or  their  aggre- 
gate debt.  Acts  1906,  Ch.  392,  p.  371. 


MASSACHUSETTS. 


1.  Corporation  Laws.* 

Constitution.  (1780.)  There  are  no  Constitutional  provisions 
concerning  corporations.  They  may  be  formed  by  special  act. 

Statutes.  The  business  corporation  law  of  Massachusetts  is 
found  in  Acts  of  1903,  Ch.  437.  Amendments,  L.  1904,  Chs.  20 7,  261 ; 
L.  1905,  Chs.  2.2.2 , 233,  242.  Under  the  general  law  corporations  may 
be  organized  for  any  lawful  purpose  except  to  deal  in  real  estate  or 
distil  or  manufacture  intoxicating  liquors  or  to  engage  in  business 
for  which  special  law  is  .provided.  This  latter  prohibition  does  not 
apply  if  such  business  is  to  be  carried  on  outside  the  State.  §§  1,  7. 
Railroads,  banks,  street  railways,  trust  companies,  loan  and  invest- 
ment, insurance,  gas  and  electric,  telegraph  and  telephone,  agricul- 
tural, and  other  corporations  are  provided  for  in  Revised  Laws,  1902, 
Chapters  ni-125. 

2.  Taxes  and  Fees. 

Organization  Expenses.  Fees  for  filing  and  recording  articles  of 
organization,  including  issuance  of  certificate  of  incorporation,  one- 
fortieth  of  one  per  cent,  of  total  amount  of  authorized  capital  stock; 
minimum  fee,  $10.  § 88. 

■% 

Franchise  Tax.  An  annual  franchise  tax  is  imposed,  the  rate  be- 
ing adjusted  annually  to  meet  State  needs.  The  tax  is  computed  upon 
a “corrected”  franchise  value  ascertained  as  follows:  The  Tax  Com- 
missioner from  returns  made  by  the  corporation,  or  “in  any  other 
manner,”  determines  the  market  value  of  the  capital  stock  and  from 
that  estimates  its  fair  cash  value  on  May  1st  preceding.  This  is  the 
franchise  value.  From  this  is  deducted  the  assessed  value  of  real 
estate  and  machinery  subject  to  local  taxation  and  any  securities 
which  in  the  hands  of  an  individual  would  be  exempt  from  taxation. 
A further  deduction  is  made  of  the  value  of  any  corporate  property 
paying  taxes  outside  the  State.  It  is  upon  the  “franchise  value”  as 
thus  corrected  that  the  tax  is  levied.  In  no  case,  however,  is  the 
corrected  franchise  value  to  exceed  20  per  cent,  of  the  entire  cor- 
porate property  nor  shall  the  tax  ever  be  less  than  one-tenth  of  one 
per  cent,  of  the  market  value  of  the  capital  stock.  §§  72,  74.  (For 
Annual  Tax  Returns,  see  § 13,  “ Reports.”) 

* References  are  to  Acts  of  1903,  Chapter  437,  except  as  otherwise  noted. 

183 


CLASSIFIED  CORPORATION  LAWS. 


184 


Local  Taxation.  Corporate  really  and  machinery  is  subject  to 
local  taxation.  Shares  of  stock  are  exempt  from  local  taxation  for 
any  year  in  which  the  corporation  has  paid  tax  upon  corporate  fran- 
chise. § 86.  Corporations  may  be  compelled  to  submit  their  books 
to  the  Tax  Commissioner  and  the  treasurer  may  be  examined  under 
oath.  § 81.  Delinquent  taxes,  if  paid  without  suit  to  recover,  bear 
interest  at  the  rate  of  6 per  cent,  per  annum,  but  12  per  cent,  if  pro- 
ceedings have  been  begun.  § 79. 

General.  On  increase  of  capital  stock,  fees  are  one-fortieth  of 
one  per  cent,  on  increase.  § 89.  For  all  certificates,  statements, 
reports,  etc.,  filed  (except  annual  tax  return  for  which  no  fee  is 
charged),  $5.  § 90.  Copies,  20  cents  a page  and  25  cents  for  certifi- 

cate. 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 7.  No  residential  re- 
quirements. Husband  and  wife  may  not  join  in  an  agreement  of 
association.  1 Op.  A-tty.  Gen.  47. 

Formation. 

1.  Agreement  of  Association.  A written  agreement  of  asso- 
ciation must  be  entered  into  by  the  incorporators.  The  agree- 
ment must  state  (§  8) : 

(1) .  That  the  subscribers  thereto  associate  themselves  with 
the  intention  of  forming  a corporation. 

(2)  Corporate  name  assumed.  This  must  indicate  that  it 
is  a corporation,  and  must  not  be  the  same  as  or  similar  to 
the  name  of  any  other  corporation  or  partnership  carrying 
on  business  in  the  Commonwealth  at  time  of  organization 
or  within  three  years  prior  thereto  unless  the  consent  of  the 
other  party  be  filed  with  the  articles.  § 5. 

(3)  Location  of  the  principal  office  in  the  Commonwealth, 
and  elsewhere  in  case  of  corporations  organized  to  do  busi- 
ness wholly  outside  the  Commonwealth. 

(4)  Purposes  for  which  the  corporation  is  formed,  and 
nature  of  the  business  to  be  transacted. 

(5)  Total  amount  of  authorized  capital  stock,  not  less 
than  $1,000;  par  value  of  shares,  not  less  than  $5;  the  num- 
ber of  shares  into  which  the  capital  stock  is  to  be  divided, 
and  the  restrictions,  if  any,  imposed  on  their  transfer;  and 
if  there  are  to  be  two  or  more  classes  of  stock,  a description 
of  each  and  the  terms  on  which  thev  are  to  be  created,  and 
the  method  of  voting  thereon. 

(6)  Any  other  provisions  not  inconsistent  with  law  for 
the  conduct  and  regulation  of  the  business  of  the  corporation, 
for  its  voluntary  dissolution,  or  for  limiting,  defining,  or 
regulating  the  powers  of  the  corporation,  or  of  its  directors 
or  stockholders  or  any  class  of  stockholders. 


MASSACHUSETTS. 


185 


(7)  The  subscriber  or  subscribers  bv  whom  the  first  meet- 
ings of  the  incorporators  shall  be  called. 

(8)  The  names  and  residences  of  the  incorporators  and 
the  amount  of  stock  subscribed  for  by  each. 

2.  First  Meeting  of  Incorporators.  Must  be  held  within  the 
State.  1 Op.  Atty.  Gen.  185.  May  be  called  on  notice  signed  by 
the  subscriber  or  subscribers  designated  thereto  in  the.  agree- 
ment of  association,  or  if  no  provision  is  made  in  the  agreement, 
by  a majority  of  the  subscribers,  served  at  least  seven  days,  be- 
fore the  meeting  personally  or  by  mail.  A copy  of  the  notice 
must  be  entered  on  the  records  of  the  corporation  with  an  affi- 
davit of  one  of  the  signers  that  such  notice  has  been  duly  served. 
Notice  may  be  waived  by  unanimous  written  consent  of  all  the 
incorporators  endorsed  on  the  agreement  of  association.  § 9. 

On  meeting,  the  incorporators  organize  by  the  election  by 
ballot  of  a temporary  clerk,  who  must  be  sworn,  followed  by  the 
adoption  of  by-laws  (See  “By-Laws,”  under  § 4)  and  the  election 
in  the  manner  set  forth  in  the  by-laws  of  directors,  a treasurer, 
a clerk  and  such  other  officers  as  the  by-laws  may  prescribe.  The 
temporary  clerk  makes  and  attests  a record  of  the  proceedings 
held  prior  to  the  election  and  qualifying  of  the  regular  clerk. 
§ 10. 

3.  Articles  of  Organization.  Are  forthwith  prepared,  signed 
and  sworn  to  by  a majority  of  the  directors  elected  at  the  first 
meeting,  setting  forth  (§  11): 

(1)  A true  copy  of  the  agreement  of  association,  and  the 
names  of  the  subscribers  thereto. 

(2)  The  date  of  the  first  meeting  and  of  any  adjournments 
thereof. 

(3)  The  amount  of  capital  stock  then  to  be  issued,  the 
amount  to  be  paid  for  in  cash,  or  by  instalments,  the  instal- 
ment to  be  paid  before  the  corporation  commences  business, 
and  the  amount  to  be  paid  for  in  property.  If  such  property 
consists  in  any  part  of  real  estate,  its  location,  area,  and  the 
amount  of  stock  to  be  issued  therefor  must  be  stated;  if  any 
part  personal  property,  it  must  be  described  in  such  detail 
as  the  Commissioner  of  Corporations  may  require,  and  the 
amount  of  stock  to  be  issued  therefor  stated.  If  issued  for 
services  or  expenses,  the  nature  of  such  services  or  expenses 
and  the  amount  of  stock  which  is  issued  therefor  must  be 
clearly  stated. 

(4)  The  name,  residence  and  post-office  address  of  each 
of  the  officers  of  the  corporation. 

4.  Approval  of  Articles.  The  articles  of  organization  and 
the  record  of  the  first  meeting  of  incorporators  are  submitted  to 
the  Commissioner  of  Corporations,  who  examines  same  and 
may  require  amendments  or  additional  information.  On  finding 
that  the  articles  conform  to  the  requirements  of  law,  he  so  certi- 
fies and  endorses  his  approval  thereon.  § 12. 


CLASSIFIED  CORPORATION  LAWS. 


1 86 


5.  Filing  and  Recording.  The  articles  of  organization,  with 
the  approval  of  the  Commissioner  of  Corporations  endorsed 
thereon,  are  filed  and  recorded,  on  payment  of  fee,  in  the  office 
of  the  Secretary  of  the  Commonwealth,  who  thereupon  issues  a 
certificate  of  incorporation  in  prescribed  form.  He  also  records 
the  certificate  of  incorporation  and  such  record  or  certified  copy 
thereof  is  conclusive  evidence  of  corporate  existence.  § 12. 

4.  Organization. 

First  Meetings.  First  meeting  of  incorporators  must  be  held 
within  the  State.  1 Op.  Atty.  Gen.  185.  (See  “Formation,”  subdiv.  2, 
under  § 3.)  Of  directors  may  be  held  within  or  without  the  State 
(§  25)  as  determined  by  the  by-laws.  § 13. 

By-Laws.  These  may  provide  for  the  time  and  place  of  holding, 
and  the  manner  of  conducting  meetings  (also  elections,  subject  to  the 
provisions  of  the  corporation  law) ; the  powers,  duties  and  term  of 
officers;  the  number  of  directors;  quorum  of  stockholders  and  direc- 
tors; the  manner  of  calling  regular  and  special  meetings  of  directors; 
method  of  making  assessments;  the  conditions  under  which  new  cer- 
tificates of  stock  may  be  issued  in  place  of  those  lost,  and  the  method 
in  general  of  transacting  the  corporate  business,  and  the  manner  in 
which  the  by-laws  may  be  amended  or  repealed.  § 13. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  articles  of  organization  in  the  office 
of  the  Secretary  of  the  Commonwealth.  § 12.  May  be  perpetual.  § 4. 
Is  not  required  to  be  limited  in  incorporation  papers.  §§  8,  11.  Con- 
tinues for  three  years  after  expiration  of  charter  period  or  annulment 
or  forfeiture  of  charter,  for  the  purpose  of  closing  up  the  corporate 
affairs.  § 52. 

Beginning  Business.  Articles  of  organization  must  be  filed  with 
Secretary  of  Commonwealth  and  the  instalment  of  capital  specified 
therein  must  be  paid  before  business  is  begun.  § 11. 

Renewal.  The  statute  contemplates  perpetual  existence  for  gen- 
eral corporations.  § 4.  No  provision  is  made  for  renewal  or  exten- 
sion. 

Forfeiture  of  Charter.  May  be  decreed  by  Supreme  Judicial 
Court  on  failure  for  two  years  to  file  annual  report.  § 49.  Injunction 
may  issue  on  non-payment  of  tax,  restraining  the  corporation  from 
continuing  business.  § 78. 

Dissolution.  May  be  accomplished  voluntarily  by  a majority  vote 
of  each  class  of  stock,  authorizing  a petition  for  dissolution  to  be 
filed  in  the  Supreme  Judicial  or  Superior  Court,  setting  forth  in  sub- 
stance the  grounds  for  such  application;  and  after  a hearing,  on  notice 
to  parties  interested,  if  there  is  no  legal  objection  thereto,  the  court 
decrees  dissolution.  §§  40,  51.  Receivers  and  distribution  of  assets, 
etc.,  are  provided  for.  §§  52-55. 


MASSACHUSETTS. 


187 


6.  Corporate  Powers. 

General.  The  usual  corporate  powers  are  enumerated.  § 4. 

To  Hold  Property.  This  power  is  limited  to  such  property  as 
is  required  by  the  purposes  of  the  corporation.  § 4,  subdiv.  f.  Deal- 
ing in  real  estate  is  expressly  excluded  from  the  purposes  for  which 
corporations  may  be  formed  under  this  law.  § 7. 

Its  Own  Stock.  Corporations  may  take  their  own 
stock  by  forfeiture  on  non-payment  of  assessments.  § 16;  Dupee  v. 
Co.,  1 14  Mass.  37,  43.  Shares  are  not  necessarily  extinguished  by 
being  transferred  to  corporation,  so  that  they  cannot  be  re-issued, 
or  so  that  the  capital  stock  is  thereby  reduced.  Leonard  v. 
Draper,  187  Mass.  536.  It  cannot  vote  such  stock  (§  23;  Co.  v.  Haven, 
101  Mass.  398,  402),  and  the  shares  so  held  are  not  taxable.  Wor- 
cester v.  Board  of  Appeals,  184  Mass.  460. 

Stock  of  Other  Corporations.  Dealing  in  stocks  and 
bonds  is  not  a bar  to  incorporation  under  general  law.  1 Op.  Atty. 
Gen.  275.  Stocks  of  other  corporations  may  be  taken  in  payment  of 
debts.  Treadwell  v.  Co.,  73  Mass.  393;  Howe  v.  Co.,  82  Mass.  493. 

To  Borrow  Money.  No  restrictions.  § 4,  subdiv.  g. 

To  Do  Business  in  Other  States.  This  power  is  given.  § 1. 
If  a corporation  is  organized  in  Massachusetts  to  do  business  wholly 
outside  the  Commonwealth,  the  location  of  its  principal  office  outside 
of  the  Commonwealth  must  be  stated  in  the  agreement  of  associa- 
tion. § 7,  subdiv.  c. 

Consolidation  or  Merger.  No  provisions. 

Amendment  of  Charter.  “ Every  corporation  may,  at  a meeting 
duly  called  for  the  purpose,  by  a vote  of  a majority  of  all  the  stock, 
or  if  two  or  more  classes  of  stock  have  been  named,  of  a majority 
of  each  class  outstanding  and  entitled  to  vote,  authorize  an  increase 
or  reduction  of  its  capital  stock  and  determine  the  terms  and  manner 
of  the  disposition  of  such  increased  stock,  may  authorize  a change 
of  location  of  its  principal  office  or  place  of  business  in  this  Com- 
monwealth or  a change  in  the  par  value  of  the  shares  of  its  capital 
stock  or  may  authorize  proceedings  for  its  dissolution. 

It  may,  by  a vote  of  two-thirds  or  by  a larger  vote  (if  the  agree- 
ment of  association  so  requires),  change  its  corporate  name,  the 
nature  of  its  business,  the  classes  of  its  capital  stock,  subsequently 
to  be  issued  and  their  voting  power,  or  make  any  other  lawful 
amendment.”  § 40. 

Articles  of  amendment  must  be  signed  and  sworn  to  by  the 
president,  treasurer  and  a majority  of  the  directors,  setting  forth  the 
amendment  and  its  due  adoption;  these  are  submitted  to  the  Com- 
missioner of  Corporations,  and  approved  and  filed  as  original  articles. 
§ 41.  (Fee,  $5  except  on  increase  of  capital  stock;  when  one-fortieth 
of  one  per  cent,  of  the  increase  must  be  paid.  §§  89,  90.) 

7.  Capital  Stock. 

Amount.  Must  not  be  less  than  $1,000.  § 8. 


. CLASSIFIED  CORPORATION  LAWS. 


1 88 


Initial  Payment.  Must  be  specified  in  articles  of  organization. 
No  requirements  as  to  amount.  § n. 

Consideration  for  Issue.  May  be  cash,  property — tangible  or 
intangible — services  or  expenses.  § 14.  But  the  particulars  of  such 
payment  must  be  fully  stated  in  the  articles  of  organization  (§  11), 
or  thereafter  in  certificates  of  additional  issues  of  stock.  § 14.  (See 
§ 13,  “ Reports.”) 

Calls  for  unpaid  subscriptions  are  made  by  the  directors  accord- 
ing to  the  by-laws  (§  13),  or  if  they  are  silent,  on  seven  days’  notice 
by  mail.  Thirty  days’  default  forfeits  the  subscriptions,  which  may 
be  sold  at  public  auction  on  ten  days’  notice  to  the  subscriber;  or 
the  directors  may  sue  for  balance.  § 15. 

Increase  or  Decrease.  May  be  authorized  by  a majority  vote  of 
all  the  stock,  or  of  each  class  of  stock,  outstanding,  at  a meeting 
duly  called  for  that  purpose.  § 40. 

In  case  stock  is  increased,  articles  of  amendment  are  thereupon 
signed  and  sworn  to  by  the  president,  treasurer  and  a majority  of 
the  directors  and  approved  and  filed  as  were  the  articles  of  organiza- 
tion. They  must  contain:  (1)  Total  amount  of  capital  stock  already 
authorized;  (2)  amount  of  stock  already  issued  for  cash  payable  by 
instalments  and  the  amount  paid  thereon,  and  amount  of  full  paid 
stock  already  issued  for  cash,  property,  services  or  expenses;  (3) 
amount  of  additional  stock  authorized;  (4)  amount  of  such  stock  to 
be  issued  for  cash,  property,  services  or  expenses  respectively;  (5) 
a description  of  the  property,  services  or  expenses  as  required  in 
original  articles.  § 42.  In  case  of  reduction,  the  articles  of  amend- 
ment are  executed,  approved  and  filed  as  above,  and  in  addition  to 
the  ordinary  statements  of  amendments  must  include:  (1)  Total 
amount  of  stock  authorized  and  issued;  (2)  amount  of  the  reduction 
and  manner  in  which  it  is  to  be  effected;  (3)  copy  of  the  vote  author- 
izing the  reduction.  No  reduction  is  allowed  which  renders  the 
corporation  insolvent.  § 43. 

Classes  of  Stock.  May  be  provided  for  in  the  original  agree- 
ment of  association,  which  must  state  the  terms  on  which  they  are 
created,  and  the  manner  of  voting  them.  § 8.  They  may  be  changed 
by  regular  amendment.  §§  27,  40. 

Par  Value  of  Shares.  Must  not  be  less  than  $5,  and  must  be 
stated  in  agreement  of  association.  § 8.  May  be  changed  by  amend- 
ment on  a majority  vote  of  all  the  stock  or  of  each  class  of  stock 
outstanding.  § 40. 

Stock  Certificates.  If  issued  to  be  paid  for  in  instalments  must 

be  legibly  stamped  with  the  words  “ per  cent,  paid  up — balance 

payable  and  shares  subject  to  forfeiture  if  unpaid.” 

§ 14.  They  are  to  be  signed  by  the  president  and  treasurer,  under 
the  corporate  seal.  § 26.  “ Each  certificate  of  stock  which  by  the 

agreement  of  association  or  amended  agreement  is  limited  as  to  its 
voting  rights,  or  which  is  preferred  as  to  its  dividend  or  as  to  its 
share  of  the  principal  upon  dissolution,  shall  have  a sufficient  state- 
ment of  such  limitation  or  preference  plainly  written  or  stamped 
upon  it,  and  each  certificate  subsequently  issued  of  any  class  of 
stock  in  the  corporation  shall  have  printed  or  stamped  thereon  the 


MASSACHUSETTS. 


189 

clause  of  such  agreement  of  association  or  amended  agreement 
authorizing  the  issue  of  stock  in  any  respect  preferred  or  limited.”  Id. 

Transfer  of  Stock.  May  be  made  by  endorsement  and  delivery 
of  certificates,  but'  is  of  no  effect  as  against  the  corporation  until 
transfer  is  shown  on  the  corporate  books  or  until  a new  certificate 
is  issued  by  it  to  the  transferee.  No  stock  shall  be  so  transferred  if 
any  instalments  remain  unpaid  thereon.  A pledgee  of  stock  may 
procure  transfer  and  a new  certificate  expressing  on  its  face  that 
it  is  held  as  collateral  security,  and  showing  the  pledgor’s  name,  but 
the  latter  remains  the  voting  stockholder.  § 28. 

8.  Stockholders. 

Rights  and  Powers.  The  stockholders  control  all  amendments 
of  agreement  of  association  and  articles  of  organization.  § 40.  (See 
“Amendment  of  Charter,”  under  § 6.)  To  dispose  of  property  and 
franchises,  two-thirds  vote  is  required.  •§  40. 

Liability.  Stockholders  are  liable  for  unpaid  subscriptions. 
§§  15,  16.  On  illegal  reduction  of  capital,  the  stockholders  become 
liable  for  the  corporate  debts  existing  at  the  time  of  the  reduction, 
to  the  amounts  paid  to  them  respectively.  They  are  also  liable  for 
money  due  operatives  for  services  rendered  within  six  months  be- 
fore demand  made  on  corporation  and  its  refusal  to  pay.  Any  such 
liability  is  in  proportion  to  the  amounts  of  stock  held  respectively 
and  any  stockholder  paying  more  than  his  proportion,  has  claim 
for  contribution  against  the  other  stockholders.  §§  33,  38. 

A stockholder’s  liability  is  enforceable  in  an  equitable  action 
brought  against  all  persons  liable,  but  only  after  insolvency  of  the 
corporation,  or  after  a judgment  against  it  has  been  returned  un- 
satisfied. §§  36-39;  Barre  Bk.  v.  Mfg.  Co.,  127  Mass.  563. 

Meetings.  Must  be  held  in  the  Commonwealth.  Annual  meet- 
ings provided  for  (§  20),  manner,  time  and  place  to  be  fixed  by  by- 
laws, but  to  be  held  within  ninety  days  after  the  end  of  its  fiscal 
year.  § 20,  amended  L.  1904,  Ch.  207.  If  time  for  holding  annual 
meeting  is  changed  by  amendment  to  the  by-laws,  a certificate  .of 
the  fact  must  be'  filed  with  the  Commissioner  of  Corporations.  L. 
1905,  Ch.  222. 

Notice.  A written  or  printed  notice  of  any  meeting  stating  its 
time,  place  and  purposes,  must  be  given  by  the  clerk  at  least  seven 
days  before  each  meeting,  personally  or  by  mail.  Written  waiver 
of  notice  signed  by  every  stockholder,  personally  or  by  duly  author- 
ized attorney  is  effectual.  § 20.  On  application  of  three  or  more 
stockholders,  a justice  of  the  peace  may  issue  a warrant  authorizing 
one  of  them  to  call  a corporate  meeting.  § 21.  Special  meetings 
may  be  called  by  the  president,  or  a majority  of  the  directors,  and 
must  be  called  by  the  clerk  on  written  request  of  three  qr  more 
stockholders  holding  at  least  one-tenth  in  interest  of  the  stock.  § 22. 

Quorum.  Is  a majority  in  interest  of  all  stock  issued  and  out- 
standing, unless  by-laws  otherwise  direct.  § 20. 

Voting.  Is  to  be  by  ballot  (§  18),  and  all  votes  must  be  recorded 
by  the  clerk  in  a book  kept  for  that  purpose.  § 18.  Each  share  of 
stock  has  one  vote.  No  share  may  be  voted  on  which  instalments 
have  been  demanded  and  are  overdue.  § 24.  If  more  than  one  class 


CLASSIFIED  CORPORATION  LAWS. 


190 


of  stock  is  created,  the  method  of  voting  thereon  must  be  prescribed 
in  the  agreement  of  association.  § 8. 

Proxies.  Voting  by  proxy  is  permitted,  but  proxies  are  in  force 
only  six  months  after  date,  and  are  invalid  after  final  adjournment 
of  the  meeting  for  which  they  were  given.  § 24. 

Voting  Trusts.  Are  held  valid.  Almy  v.  Orne,  165  Mass.  126; 
Brightman  v.  Bates,  175  Mass.  105. 

9.  Directors. 

Number.  The  board  must  consist  of  not  less  than  three  mem- 
bers (§  17),  to  be  elected  annually.  § 18.  They  may  be  divided  into 
not  more  than  five  classes,  one  class  to  be  elected  each  year.  § 18. 

Qualifications.  Directors  must  be  stockholders  unless  the  by- 
laws otherwise  provide.  § 18.  No  residential  requirements. 

Powers.  Are  to  be  defined  by  the  by-laws.  § 19. 

Liability.  The  directors  are  jointly  and  severally  liable  for  the 
corporate  debts,  to  the  extent  of  any  illegal  dividends  or  improper 
loans  made  to  stockholders  or  directors.  Those  voting  against  such 
acts  are  not  liable.  § 35.  For  illegal  issue  of  stock  the  president, 
treasurer  and  directors  are  jointly  and  severally  liable  for  corporate 
debts  contracted  during  their  tenure  of  office;  and  for  any  false 
statements  in  reports,  etc.,  the  officers  signing  the  same  are  so 
liable.  § 34- 

Meetings.  May  be  held  within  or  without  the  Commonwealth 
as  determined  by  by-laws.  May  be  held  on  waiver  without  notice. 
§ 25.  The  number  necessary  to  a quorum  may  be  provided  by  the 
by-laws  (§  13),  but  a majority  is  required  unless  the  by-laws  other- 
wise specify.  A majority  of  the  quorum  may  act.  Sargent  v.  Web- 
ster, 13  Met.  497.  Voting  by  proxy  by  directors  is  unlawful.  Op. 
Atty.  Gen.  May  27,  1901. 

Executive  Committee.  An  executive  committee  may  be  pro- 
vided for  by  the  by-laws,  to  be  elected  from  and  by  the  board  of 
directors  and  to  manage-  current  and  ordinary  business.  §§  13,  19. 


10.  Officers. 

A president,  who  must  be  a director,  a clerk,  a treasurer  and  such 
other  officers  and  agents  as  the  by-laws  may  authorize,  are  pre- 
scribed by  the  statutes.  § 17.  They  are  to  hold  office  for  one  year 
and  until  their  successors  have  been  elected  and  qualified.  § 18. 
The  treasurer  may  be  required  to  give  a bond,  and  the  clerk,  who 
must  be  a resident,  must  be  sworn.  Id.  The  officers  are  liable  for 
any  illegal  issue  of  stock  and  for  any  false  statements  they  may 
make  in  reports.  § 34.  For  refusal  to  exhibit  books,  records  and 
papers  to  stockholders,  officers  are  liable  for  all  actual  damages 
resulting.  § 30. 


MASSACHUSETTS. 


191 


11.  Principal  Office. 

Must  be  named  in  the  agreement  of  association,  and  if  business 
is  to  be  conducted  wholly  outside  of  the  Commonwealth,  the  prin- 
cipal office  out  of  the  Commonwealth  must  also  be  named.  § 8.  It 
must  also  be  stated  in  annual  report,  or  certificate  of  condition. 
§45.  It  may  be  changed  by  regular  amendment.  § 40. 

12.  Corporate  Books. 

What  Required.  A stock  and  transfer  book  is  prescribed  to 
contain  a complete  list  of  all  stockholders,  their  residences  and 
holdings.  A record  of  all  meetings  of  stockholders  is  also  required. 
§ 30.  A record  of  all  votes  of  the  corporation  is  to  be  kept  by  the 
clerk.  § 18. 

Where  Kept.  All  these  books,  and  the  agreement  of  association 
and  attested  copies  of  the  articles  of  organization,  and  of  amendments, 
and  the  by-laws  showing  amendments,  must  be  kept  at  the  principal 
office  in  the  Commonwealth,  and  are  all  open  to  the  inspection  of 
stockholders.  § 30.  Creditors  may  compel  issuance  of  list  of  stock- 
holders and  officers.  § 36. 

13.  Reports. 

Every  corporation  must  within  thirty  days  after  its  annual  meet- 
ing file  a report  of  condition,  signed  and  sworn  to  by  its  president, 
treasurer  and  at  least  a majority  of  its  directors,  stating:  (1)  The 
corporate  name;  (2)  location,  with  street  address,  of  its  principal 
office  in  the  Commonwealth,  and  elsewhere  if  organized  to  do  busi- 
ness wholly  outside  the  Commonwealth;  (3)  date  of  the  last  preced- 
ing annual  meeting;  (4)  total  amount  of  its  authorized  capital  stock; 
amount  issued  and  outstanding;  amount  paid  ’ thereon;  class  or 
classes,  if  any,  into  which  it  is  divided;  par  value  and  number  of 
shares;  (5)  names  and  addresses  of  all  directors  and  officers,  with 
date  of  expiration  of  each  term;  (6)  statement  of  assets  and  liabilities. 
(Form  given.)  § 45.  Corporations  with  capital  of  $100,000  or  over 
must  accompany  report  with  a sworn  statement  of  an  auditor  ap- 
pointed by  a committee  of  three  stockholders  who  are  not  directors, 
or  if  no  such  committee  can  be  had,  by  the  directors;  the  appointment 
and  qualification  of  auditor  must  be  filed  with  the  Commissioner 
of  Corporations.  § 47.  Report  is  to  be  approved  and  filed  as  were 
original  articles.  § 46. 

An  annual  tax  return  is  required  to  be  filed  by  the  treasurer  wjth 
the  Tax  Commissioner,  between  May  1st  and  May  10th,  as  of  May 
1st,  showing:  (1)  Total  authorized  capital  stock;  amount  issued 

and  outstanding  and  amount  paid  thereon;  classes,  if  any,  into  which 
it  is  divided;  par  value  and  number  of  shares;  market  value  of  shares, 
or  of  each  class  of  shares;  (2)  a statement  in  such  detail  as  the  Tax 
Commissioner  may  require,  of  the  real  estate,  machinery,  merchan- 
dise and  other  assets  belonging  to  the  corporation  within  and  without 
the  Commonwealth;  (3)  a complete  list  of  the  stockholders  of  the 
corporation,  their  residences  and  the  amount  and  class  of  stock  of 
each.  If  any  stock  is  held  as  collateral  security,  the  name  and 
residence  of  pledgor  and  pledgee.  § 48. 


CLASSIFIED  CORPORATION  LAWS. 


192 


When  stock  is  issued  subsequent  to  the  issue  stated  in  articles 
of  organization,  a certificate  must  be  signed  and  sworn  to  by  the 
president,  treasurer  and  a majority  of  the  directors,  stating:  (1) 

Total  amount  of  capital  stock  authorized;  (2)  amount  already  issued 
for  cash,  payable  in  instalments  and  amounts  paid  thereon;  (3) 
amount  of  additional  stock  to  be  issued  for  cash,  property,  services 
or  expenses  respectively;  (4)  a description  of  the  property,  services 
or  expenses  as  required  for  original  articles  of  organization.  (See 
‘‘Articles  of  Organization,”  under  § 3.)  This  certificate  is  approved 
and  filed  as  were  the  original  articles.  § 14. 

14.  Foreign  Corporations. 

Foreign  corporations  shall  not  engage  in  the  Commonwealth  in 
any  business  not  permitted  to  domestic  corporations.  §§  56,  5 7. 
Foreign  corporations  having  a usual  place  of  business  in  the  Com- 
monwealth or  which  are  engaged  therein,  permanently  or  tempo- 
rarily, and  with  or  without  a usual  place  of  business,  in  the  construc- 
tion, creation,  alteration  or  repair  of  a building,  bridge,  railroad, 
railway,  or  structure  of  any  kind,  shall  before  doing  business  in  the 
Commonwealth,  in  writing  appoint  the  Commissioner  of  Corporations 
their  attorney  on  whom  process  may  be  served,  which  power  of 
attorney,  with  a copy  of  the  vote  authorizing  its  execution,  is  filed 
in  the  office  of  the  Commissioner.  § 58;  L.  1905,  Ch.  242. 

Such  corporations  must  also  file  with  Commissioner  of  Corpora- 
tions a copy  of  their  charter,  articles  or  certificates  of  incorporation, 
certified  by  the  Secretary  of  State  of  the  home  state,  or  any  officer 
having  custody  of  its  original  record;  also  a true  copy  of  by-laws, 
and  a certificate  setting  forth:  (1)  The  name  of  the  corporation; 

(2)  location  of  its  principal  office;  (3)  names  and  addresses  of  it§ 
president,  treasurer,  clerk  or  secretary  and  directors;  (4)  date  of 
annual  meeting  for  elections;  (5)  amount  of  capital  stock,  authorized 
and  issued;  number  and  par  value  of  shares;  amount  paid  in,  and 
if  any  paid  otherwise  than  in  money,  the  details  of  such  payments 
(as  required  of  domestic  corporations).  This  certificate  is  signed 
and  sworn  to  by  president,  treasurer  and  directors.  § 60. 

Fees  for  filing  above  papers  are  $25  to  the  treasurer  and  re- 
ceiver general;  for  every  other  certificate,  including  annual  report  to 
the  Secretary  of  Commonwealth,  $5.  § 91. 

Penalties  for  Non-Compliance.  Inability  to  sue,  and  fines  against 
officers  and  agents,  not  exceeding  $500.  § 60.  Liabilities  of  officers, 

directors  and  stockholders  are  the  same  as  of  domestic  corporations. 
§ 60;  Clark  v.  Knowles,  187  Mass.  35. 

Taxation.  An  excise  tax  is  imposed  on  foreign  corporations  of 
one-hundredth  of  one  per  cent,  of  the  par  value  of  its  authorized  capi- 
tal stock  as  shown  by  its  annual  certificate  of  condition;  but  local 
taxes  paid  on  property  in  the  State  (§  72)  may  be  deducted,  and  such 
excise  tax  is  never  to  exceed  $2,000.  § 75. 

The  assessors  make  annual  return  to  Tax  Commissioner  before 
the  first  Monday  of  August,  of  the  names  of  all  foreign  corporations 
having  a usual  place  of  business  within  his  city  or  town.  L.  1904, 
Ch.  181. 

Books.  No  specific  requirements.  Post  Co.  v.  R.  R.  Co.,  144 
Mass.  341. 


MASSACHUSETTS. 


193 


Reports.  Foreign  corporations  engaged  in  business  in  the  Com- 
monwealth shall  annually  within  thirty  days  after  the  annual  meeting 
or  the  final  adjournment  thereof,  but  not  later  than  ninety  days  from 
the  fixed  date  for  such  meeting,  file  a certificate  of  condition  with 
the  Secretary  of  the  Commonwealth.  Such  certificate  is  to  be  signed 
and  acknowledged  by  the  president,  treasurer  and  a majority  of  the 
board  of  directors  and  must  show  the  amount  of  authorized  capital 
stock,  the  amount  paid  thereon,  and  the  corporate  assets  and  liabili- 
ties as  of  date  not  more  than  ninety  days  prior  to  such  annual 
meeting  (§§  66,  67)  in  same  form  as  provided  for  domestic  corpora- 
tions. § 60;  also  L.  1905,  Ch.  233.  The  certificate  of  any  increase 
or  decrease  of  capital  stock  must  also  be  filed.  § 65.  Penalty  for 
failure  to  file  certificate  is  fine  from  $5  to  $10  per  day  for  first  fifteen 
days  of  default,  and  $200  for  each  day  thereafter.  § 68.  Accom- 
panying statement  is  made  as  prescribed  by  domestic  corporations 
in  § 47,  the  auditor,  however,  to  be  chosen  by  the  directors.  § 67. 

Attachments  Against.  Lie  against  foreign  corporations  as  non- 
residents. § 62. 


MICHIGAN. 


1.  Corporation  Laws.* 

Constitution.  (1850.)  Corporations  not  to  be  created  by  special 
act.  Art.  XV,  § 1.  Stockholders  liable  for  wages  of  employees. 
Id.,  § 7-  Term  of  existence  limited  to  thirty  years,  subject  to  exten- 
sion for  further  terms  of  the  same  length  on  two-third  vote  of  stock; 
reorganization  at  end  of  term  to  require  four-fifth  vote.  Id.,  § 10. 
Real  estate  not  to  be  held  longer  than  ten  years  if  not  necessary  for 
corporate  purposes.  Id.,  § 12.  The  credit  of  the  State  not  to  be 
granted  to  aid  corporation.  Art.  XIV,  § 6.  State  not  to  become  a 
stockholder.  Id.,  § 8. 

Statutes.  The  general  corporation  law  is  contained  in  Act  232 
of  the  Public  Acts  of  1903.  Mining  and  manufacturing  companies  are 
provided  for  in  Chapters  186,  187  and  189  of  the  Compiled  Laws  of 
Michigan  (1897),  and  in  Act  233  of  the  Laws  of  1903.  By  §34  of  Act 
232  (L.  1903),  Chapter  230  of  the  Compiled  Laws  of  1897  applies 
where  the  Act  of  1903  is  silent.  In  Title  IX  of  the  Compiled  Laws 
are  special  provisions  relating  to  banks,  railroads,  plank  roads  and 
bridges,  etc.,  telegraph  and  telephone  companies,  building  and  loan 
and  other  classes  of  corporations.  Foreign  corporations  are  pro- 
vided for  in  L.  1901,  Act  206,  am’d  L.  1903,  Act  34.  Amendments 
and  supplements  to  the  general  corporation  law  are  contained  in  L. 
1905,  Acts  10,  28,  96,  105,  1 12,  194,  328,  329. 

Under  the  general  law  corporations  may  be  formed  for  any  law- 
ful business  unless  provided  for  by  special  law  as  above.  §§  1,  36. 

2.  Taxes  and  Fees. 

Organization  Expenses.  Franchise  fee  to  be  paid  to  Secretary 
of  State  on  filing  of  articles  of  association,  one-half  mill  on  each  dol- 
lar (50  cents  on  each  $1,000)  of  authorized  capital  stock;  minimum 
fee,  $5.  C.  L.,  § 8574. 

Fees  to  Secretary  of  State:  Recording,  20  cents  per  folio  (§  19); 
certifying  copies,  20  cents  per  folio,  with  minimum  fee  of  50  cents; 
for  certificate  attached,  25  cents;  for  filing  articles,  etc.,  50  cents  each. 
C.  L.,  § 71.  Recording  fee  to  County  Clerk,  20  cents  per  folio.  § 19. 

Franchise  Tax.  None  imposed. 

* References,  unless  otherwise  noted,  are  to  Act  232  of  the  Public  Acts  of 
1903.  “C.  L.”  refers  to  Compiled  Laws  of  1897. 


194 


MICHIGAN. 


195 


Local  Taxation.  Corporate  property  is  taxed  the  same  as  that 
of  individuals,  but  it  is  expressly  provided  that  the  capital  stock  shall 
not  be  taxed  as  such.  § 31.  Mining  companies  are  taxed  on  output 
of  mines.  C.  L.,  §§  6985,  7022. 

General.  Amendments,  etc.,  are  recorded  with  Secretary  of  State 
and  County  Clerk;  fees  in  either  office,  20  cents  per  folio.  § 19.  To 
Secretary  of  State  for  filing  same,  50  cents;  on  increase  of  capital 
stock  or  renewal,  same  fees  as  on  original  incorporation.  C.  L.,  § 8574. 
For  filing  annual  reports,  50  cents  each.  Id.,  § 73. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 1.  No  residential  re- 
quirements. Incorporators  are  held  liable  for  false  statements  as  to 
amount  of  capital  stock  paid  in.  McBryan  v.  Co.,  130  Mich,  ill 
(1902). 

Articles  of  Association.  Are  signed  and  acknowledged  by  each 
of  the  incorporators.  Blanks  for  same  are  furnished  or  approved  by 
the  Secretary  of  State.  The  articles  must  set  forth  (§  2)  : 

(1)  Name,  which  must  not  so  nearly  resemble  that  of  any 
corporation  lawfully  existing  or  doing  business  in  the  State 
as  to  lead  to  confusion  or  uncertainty. 

(2)  Purposes  of  the  incorporation.  Must  be  stated  dis- 
tinctly and  definitely.  Operations  under  charter  limited  as 
defined  in  this  statement.  The  statutes  are  silent  as  to 
plurality  of  purposes  except  that  manufacturing  and  mercan- 
tile businesses  may  be  united. 

(3)  Principal  place  or  places  where  the  corporate  opera- 
tions are  to  be  conducted. 

(4)  Amount  of  authorized  capital  stock,  not  less  than 
$1,000  and  not  more  than  $25,000,000.  Amount  subscribed, 
which  must  not  be  less  than  50  per  cent,  of  the  authorized 
capital  stock.  Common  and  preferred  stock  may  be  pro- 
vided for,  in  which  case  an  exact  statement  of  the  terms  of 
issue  and  the  amount  of  each  subscribed  and  paid  in  must 
be  included. 

(5)  Number  of  shares  into  which  the  capital  stock  is  di- 
vided, par  value  to  be  either  $10  or  $100,  or  for  mining  com- 
panies, $25.  L.  1903,  Act  233. 

(6)  Amount  .of  capital  stock  paid  in  at  the  time  of  exe- 
cuting the  articles,  which  must  be  not  less  than  10  per  cent, 
of  the  authorized  capital  and  in  no  case  less  than  $1,000,  un- 
less capitalization  be  $2,000  or  less,  in  which  case  25  per 
cent,  must  be  paid  in.  If  stock  is  paid  for  in  property,  the 
articles  must  contain  an  itemized  description  thereof,  with 
the  valuation  at  which  each  item  is  taken.  Valuation  stated 
is  conclusive  in  the  absence  of  actual  fraud. 

(7)  Place  in  the  State  where  office  of  the  company  is  lo- 
cated. 


196 


CLASSIFIED  CORPORATION  LAWS. 


(8)  Term  of  existence,  not  exceeding  thirty  years.  Const., 
Art.  XV,  § 10. 

(9)  Names  and  residences  of  stockholders  and  the  num- 
ber of  shares  subscribed  by  each.  § 2. 

The  articles  may  also  contain  any  provision  which  the  incor- 
porators deem  advantageous  for  the  regulation  of  the  business  and 
for  the  conduct  of  the  affairs  of  the  corporation,  and  any  provision, 
creating,  defining,  limiting  and  regulating  the  powers  of  the  corpora- 
tion, its  directors  and  any  classes  of  stockholders.  § 2. 

Filing  and  Recording.  The  articles  of  association  are  recorded 
with  the  Secretary  of  State  and  in  the  office  of  the  clerk  of  the  county 
in  which  the  corporate  operations  are  to  be  carried  on,  or  if  the  cor- 
poration is  formed  to  carry  on  business  outside  of  the  State,  in  the 
county  in  this  State  in  which  the  office  of  the  corporation  is  located. 
§ 9.  After  recording,  the  articles  are  returned  with  endorsement  of 
record.  § 19. 

4.  Organization. 

First  Meetings.  In  practice  is  usually  held  within  the  State,  as 
a first  meeting  outside  is  of  doubtful  legality.  May  be  called  by  any 
two  of  the  incorporators,  by  notice  for  two  weeks  in  newspaper  pub- 
lished in  county  where  office  is  located.  May  be  waived  in  writing 
by  all  the  subscribers  to  the  capital  stock.  § 3.  As  directors  are  not 
named  in  the  articles,  they  should  be  elected  at  first  meeting.  Elec- 
tion of  officers  and  final  organization  is  governed  as  to  time  and 
place  by  the  by-laws.  C.  L.,  § 8528. 

By-Laws.  Are  to  be  adopted  by  the  stockholders.  § 13.  They 
may  determine  the  manner  of  calling  and  conducting  meetings,  the 
number  of  members  necessary  to  constitute  a quorum,  the  number  of 
shares  to  entitle  members  to  one  or  more  votes,  the  mode  of  voting 
by  proxy,  the  mode  of  selling  shares  for  non-payment  of  assessments, 
the  tenure  of  officers,  and  may  prescribe  penalties  for  violation,  not 
to  exceed  $20  for  each  offence.  C.  L.,  § 8528. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  recording  articles  of  association  (§  9), 
and  unless  limited,  continues  thirty  years.  § 2;  Const.,  Art.  XV,  § 10. 
After  expiration  by  limitation  or  annulment  of  franchise,  _ or  other- 
wise, it  continues  three  years  for  the  purpose  of  closing  affairs.  C.  L., 
§ 8534.  On  voluntary  dissolution  receivers  may  continue  business  for 
sixteen  months.  L.  1905,  Act  96. 

Beginning  Business.  May  not  be  commenced  until  50  per  cent, 
of  the  capital  stock  has  been  subscribed  and  not  less  than  10  per  cent, 
has  been  paid  in,  the  amount  paid  in  to  be  at  least  $1,000,  except 
where  total  capital  is  $2,000  or  less,  when  25  per  cent,  must  be  paid 
in.  § 2. 


MICHIGAN. 


197 


Renewal.  May  be  had  for  successive  terms  not  exceeding  thirty 
years,  by  a vote  of  two-thirds  of  the  stock  (Const.,  Art.  XV,  § 107) 
at  annual  meeting  next  preceding  expiration,  or  at  special  meeting 
called  for  that  purpose  held  within  two  years  before  expiration  of 
original  period.  Procedure  prescribed.  § 33;  L.  1905,  Act  328.  If 
reorganization  is  desired,  four-fifths  vote  of  stock  is  necessary.  L. 
1899,  Act  60. 

Forfeiture  of  Charter.  On  failure  to  file  annual  report  for  ten 
days  after  February  1st,  corporate  powers  are  suspended.  § 12;  L. 
1905,  Act  194.  Information  in  the  nature  of  quo  warranto  may  be 
filed  by  Attorney  General  for  misuser  or  non-user  of  franchise.  C.  L., 
§ 9950.  Failure  to  keep  stock  and  transfer  books  at  principal  office 
in  the  State  (C.  L.,  § 8567),  and  violation  of  the  law  against  monopolies 
are  grounds  for  forfeiture.  L.  1899,  Act  255;  L.  1905,  Acts  229,  329. 

Dissolution.  May  be  effected  by  application  to  the  courts.  L. 
1905,  Act  10. 

6.  Corporate  Powers. 

General.  The  usual  common  law  powers  and  such  others  as  are 
incidental  to  these  are  expressly  granted.  §§  13,  14. 

To  Hold  Property.  Corporation  may  not  hold  real  estate  longer 
than  ten  years  unless  it  is  actually  occupied  by  the  corporation  in  the 
exercise  of  the  corporate  franchises  (Const.,  Art.  XV,  § 12),  and  the 
facts  regarding  same  are  required  to  be  specified  in  annual  report. 
L.  1905,  Act  194.  The  power  is  given  to  hold  and  convey  real  or  per- 
sonal property  required  for  corporate  purposes  and  such  as  may  be 
conveyed  or  mortgaged  in  good  faith  to  the  company  as  security  for 
or  in  satisfaction  of  debts.  § 14.  Mining  companies  are  limited  to 
50,000  acres.  C.  L.,  § 7021. 

Its  Own  Stock.  May  be  purchased  on  sale  for  non- 
payment of  assessments.  L.  1903,  Act  233;  C.  L.,  § 7008. 

Stock  of  Other  Corporations.  Mining  companies  are 
expressly  given  power  to  hold  stock  in  canal,  harbor,  plank  road  or 
railroad  companies  offering  facilities  for  their  mines,  and  in  light 
and  power  companies  for  purposes  of  their  business.  They,  may  also 
engage  in  navigation  to  the  same  extent,  and  companies  engaged 
wholly  in  mining  may  own  stock  in  smelting  and  refining  companies, 
domestic  and  foreign.  L.  1903,  Act  233;  L.  1905,  Act  105;  C.  L., 
§§  7011,  7012. 

To  Borrow  Money.  No  restrictions. 

To  Do  Business  in  Other  States.  Business  may  be  conducted  in 
whole  or  in  part  anywhere  within  the  United  States.  § 8. 

Consolidation  or  Merger.  Mining  companies  may  consolidate  on 
three-fifths  vote  of  stock  of  each  company,  terms  to  be  agreed  on  at 
meeting  of  the  stockholders.  C.  L.,  §§  7015-7018;  Anderson  Co.  v. 
Pungs,  134  Mich.  474  (1903. 


i g8 


CLASSIFIED  CORPORATION  LAWS. 


Amendment  of  Charter.  May  be  made  by  a vote  of  two-thirds  of 
the  stock  at  any  regular  or  special  meeting  duly  called  for  that  pur- 
pose. A copy  of  the  resolution  authorizing  the  amendment  is  signed 
and  acknowledged  by  the  president  and  secretary  of  the  corporation 
and  recorded  as  were  the  original  articles.  § 17;  C.  L.,  § 7019. 


7.  Capital  Stock. 

Amount.  Must  not  be  less  than  $1,000  nor  more  than  $25,000,000. 
§ 2.  Of  mining  companies,  not  less  than  $10,000  nor  more  than  $10,- 
000,000.  L.  1903,  Act  233. 

Initial  Payment.  Must  be  at  least  10  per  cent,  of  authorized 
capital  and  in  no  case  less  than  $1,000  (unless  capital  is  $2,000  or 
less,  in  which  case  it  is  to  be  25  per  cent,  of  same).  At  least  50  per 
cent,  of  total  capital  must  be  subscribed  before  certificate  is  filed. 
§ 2. 


Consideration  for  Issue.  May  be  cash  or  property,  but  where 
payment  is  otherwise  than  in  cash,  the  articles  must  contain  itemized 
description  of  the  property  taken,  with  the  valuation  of  each  item.  All 
property  is  required  to  be  detailed  in  annual  report.  L.  1905,  Act 
194.  Valuation  is  conclusive  in  the  absence  of  actual  fraud.  §§  2,  14; 
Graves  v.  Brooks,  117  Mich.  424  (1898).  The  directors  may  call  in 
subscriptions  in  such  instalments  and  at  such  times  and  places  as 
they  think  proper,  by  giving  notice  prescribed  by  the  by-laws. 

Increase  or  Decrease.  Of  stock  and  number  of  shares  may  be 
effected  at  the  annual  meeting  of  the  stockholders  or  at  special  meet- 
ing, by  vote  of  two-thirds  of  the  stock,  which  vote  may  also  fix  the 
value  of  and  the  price  at  which  any  increase  so  voted  shall  be  sub- 
scribed and  paid  for,  and  all  terms  thereof.  The  president  and  a ma- 
jority of  the  directors  make  a certificate  of  the  facts,  which  is  exe- 
cuted and  recorded  as  were  the  original  articles  of  association.  In 
order  to  entitle  it  to  be  recorded,  it  must  show  that  at  least  50  per 
cent,  of  the  capital  stock  so  increased  has  been  subscribed  for  and  10 
per  cent,  paid  in.  Capital  stock  must  not  be  reduced  to  prejudice  of 
creditors.  § 2. 

Classes  of  Stock.  May  be  provided  for  in  articles  of  association 
(§  2),  or  may  be  subsequently  created  by  a three-fourths  vote  of  the 
stock  (§  35),  but  preferred  stock  must  not  exceed  two-thirds  of  the 
actual  paid  up  capital,  and  shall  be  subject  to  redemption  at  par  at 
a certain  time  to  be  fixed  by  the  by-laws,  and  to  be  expressed  on  the 
preferred  stock  certificates.  Cumulative  dividends,  not  exceeding  8 
per  cent,  per  annum,  are  permitted,  and  preferred  stockholders  are 
exempt  from  personal  liability  for  corporate  debts,  except  debts  for 
labor  performed.  The  preferred  stock  votes  as  does  the  common 
stock  in  elections  of  directors,  unless  otherwise  provided  in  the  ar- 
ticles of  association  or  in  the  amendments  thereof,  and  if  in  any  case 
the  value  of  the  common  stock  has  been  impaired  to  the  extent 
of  10  per  cent.,  or  if  dividends  due  on  the  preferred  stock  remain  un- 
paid for  sixty  days,  the  preferred  stock  shall  have  equal  rights  with 
the  common  in  the  control  of  the  company.  § 35. 


MICHIGAN. 


199 


Par  Value  of  Shares.  Must  be  either  $10  or  $100  (§  2),  except 
of  mining  companies  which  must  be  $ 25.  L.  1903,  Act  233. 

Stock  Certificates.  Certificates  of  preferred  stock  must  show 
time  of  redemption  and  time  of  payment  of  dividends.  § 35. 

Transfer  of  Stock.  Must  be  made  on  the  books  of  the  company 
in  such  manner  as  the  by-laws  may  prescribe,  and  the  corporation 
has  a lien  on  stock  and  on  the  property  of  its  members  invested 
therein,  for  all  debts  due  from  them  to  such  corporation.  § 16. 


8.  Stockholders. 

Rights  and  Powers.  Their  liability  is  limited  and  their  powers 
extensive,  the  directors  being  narrowed  in  their  authority.  Any  three 
stockholders  may  call  elections  on  refusal  of  directors.  § 5;  Star 
Line  v.  Van  Vliet,  43  Mich.  364  (1880). 

Liability.  Stockholders  are  liable  for  any  amounts  unpaid  on 
subscriptions.  §§  24,  28.  They  are  also  liable  beyond  this  for  debts 
due  for  labor  performed.  Const.,  Art.  XV,  § 7.  In  case  of  withdrawal 
or  refunding  of  stock  while  there  are  corporate  debts,  the.  stock- 
holders are  severally  liable  to  the  extent  of  the  amount  received  by 
them.  § 21.  Preferred  stock  is  exempt  from  liability  except  for  debts 
for  labor.  § 35.  Liability  for  labor  claims  may  be  enforced  against 
any  stockholder  any  time  after  execution  against  corporation  is  re- 
turned unsatisfied  or  if  the  corporation  has  been  adjudged  a bank- 
rupt. A stockholder  compelled  to  pay  has  right  of  contribution 
against  the  other  stockholders.  § 29. 

Meetings.  Offices  of  the  corporation  may  be  established  and 
meetings  of  the  stockholders  and  directors  held  therein,  in  any  part 
of  the  United  States.  § 20. 

Time,  place,  notice  and  manner  of  conducting  meetings  are  to  be 
regulated  by  articles  of  association  and  by-laws.  C.  L.,  § 8528.  If 
the  directors  refuse  or  neglect  to  call  annual  meeting,  stockholders 
may  do  so  on  notice  as  prescribed  for  first  meeting.  § 5. 

Quorum.  A majority  of  the  stock  constitutes  a quorum.  § 10. 

Voting.  At  all  meetings  each  share  shall  be  entitled  to  one  vote. 
Id.  Voting  at  elections  must  be  by  ballot.  C.  L.,  § 8553.  Preferred 
stock  votes  at  election  of  directors  unless  otherwise  prescribed  in 
articles  of  association  or  amendments  thereto,  and  in  case  of  mis- 
management of  the  company  impairing  the  value  of  the  common 
stock  to  10  per  cent,  of  its  value,  votes  on  all  matters.  § 35. 

Proxies.  Stockholders  may  vote  by  proxy  duly  filed.  § 10.  Mode 
thereof  to  be  prescribed  by  by-laws.  C.  L.,  § 8528. 

Cumulative  voting  is  prescribed.  C.  L.,  § 8553;  L.  1903,  Act  223. 

9.  Directors. 

Number.  Must  be  not  less  than  three.  § 4.  Of  mining  com- 
panies, not  less  than  three  nor  more  than  nine.  L.  1903,  Act  233. 

Qualifications.  They  must  be  stockholders.  § 4. 


200 


CLASSIFIED  CORPORATION  LAWS. 


Powers.  They  have  general  supervision  of  the  affairs  of  the 
company.  They  fill  vacancies  in  the  board  for  the  current  year.  § 7. 

Liability.  For  illegal  dividends  assenting  directors  are  jointly 
and  severally  liable  for  existing  debts.  § 22.  For  wilful  neglect  or 
refusal  to  file  annual  report,  each  is  liable  for  corporate  debts  con- 
tracted since  the  last  report  and  for  all  damages  resulting.  A fine  of 
$25  and  $5  additional  for  every  day’s  default  in  filing  notice  of  dis- 
solution is  imposed.  § 12;  L.  1905,  Act  194.  For  violations  of  the 
provisions  of  the  corporation  law,  assenting  directors  are  liable  for 
the  debts  contracted  after  violation  to  three  times  the  amount  paid 
in  on  the  stock  standing  in  their  names.  § 23.  For  violations  of 
statute  against  unlawful  monopolies  and  combinations,  individuals  of 
the  corporation  are  liable  to  fines  from  $50  to  $5,000  and  imprison- 
ment from  six  months  to  a year.  L.  1899,  Act  255,  § 4. 

Meetings.  Time,  place  and  manner  of  conducting  meetings  are 
governed  by  by-laws.  C.  L.,  § 8528.  May  be  held  without  the  State. 
§ 20;  C.  L.,  § 7033.  Notice  of  directors’  meeting  sent  by  mail  must 
give  person  notified  reasonable  time  to  reach  place  of  meeting.  Doyle 
v.  Mizner,  42  Mich.  332.  Quorum  is  a majority.  § 10. 

Executive  Committee.  May  be  provided  for  in  articles  of  asso- 
ciation or  in  by-laws. 

10.  Officers. 

General.  The  directors  elect  a president  of  the  corporation  and 
board,  and  one  or  more  vice-presidents  from  their  number  and  also 
elect  a secretary  and  treasurer  and  assistants  if  necessary,  and  such 
other  officers  and  agents  as  the  by-laws  may  prescribe.  If  the  stock- 
holders so  direct,  the  same  person  may  hold  the  office  of  secretary 
and  treasurer.  § 6.  (For  liabilities,  see  under  § 9,  “Directors.”) 

11  Principal  Office. 

An  office  in  charge  of  an  agent  on  whom  process  may  be  served 
must  be  maintained  within  the  State.  §§  2,  20.  Unless  the  articles  or 
amendment  thereof  specifically  provide  for  the  location  of  the  princi- 
pal office  without  the  State,  the  secretary  and  treasurer  must  reside 
and  transact  the  corporation’s  business  at  its  office  within  the  State. 
§ 6.  The  place  of  business  within  the  State  may  be  changed  by  a 
two-thirds  vote  of  the  stock,  but  in  case  of  removal  from  one  county 
to  another  a certificate  of  the  removal,  executed  by  the  president  and 
secretary,  is  attached  to  the  articles  of  association,  and  both  are  to 
be  immediately  recorded  in  the  office  of  the  clerk  of  the  county  from 
which  removal  is  made.  § 18. 

Offices  may  be  established  anywhere  within  the  United  States  by 
a vote  of  the  majority  of  the  stock  at  a meeting  called  for  that  pur- 
pose. Any  such  office  must  be  certified  by  the  directors  to  the  Sec- 
retary of  State  of  Michigan  within  two  months  from  its  establish- 
ment. Must  not  be  changed  within  one  year.  § 20. 

12.  Corporate  Books. 

What  Required.  Stock  books  (§  16)  and  account  books  (§  15) 


MICHIGAN. 


201 


are  mentioned.  A list  of  stockholders,  with  number  of  shares  held 
by  each,  and  a transfer  book  must  be  kept.  C.  L.,  § 8567. 

Where  Kept.  At  place  where  the  corporation  is  located,  or  at 
the  office  of  the  treasurer  of  the  company,  within  the  State.  § 15. 
The  list  of  stockholders  with  number  of  shares  held  by  each  and 
transfer  book  must  be  kept  at  the  agency  or  office  in  the  State,  if  the 
principal  place  of  business  is  located  without  the  State.  C.  L.,  § 8567. 

Examination  of.  Account  books  and  statement  are  to  be  open  to 
the  inspection  of  stockholders  at  all  reasonable  times;  and  as  often 
as  once  in  each  year  a true  statement  of  the  accounts  of  the  cor- 
poration must  be  made  and  exhibited  to  the  stockholders.  § 15. 

13.  Reports. 

Annually,  in  January  or  February,  corporations  must  make  dupli- 
cate reports  for  the  fiscal  year  ending  December  31st,  on  blanks 
furnished  by  the  Secretary  of  State.  They  must  be  signed  by  a ma- 
jority of  the  directors,  verified  by  the  secretary  and  deposited  with 
the  Secretary  of  State.  They  must  set  forth  the  amount  of  authorized 
stock,  common  and  preferred;  amount  subscribed  and  amount  paid  in, 
in  cash,  and  in  property;  the  capital  invested  in  real  and  personal 
estate,  and  the  present  value  as  near  as  it  may  be  estimated;  value 
of  real  estate  used  in  business;  real  estate  not  so  used;  and  of  goods, 
chattels,  merchandise  and  all  other  tangible  and  intangible  property, 
specifying  the  kind;  value  of  corporate  credits  and  amount  of  debts 
(L.  1905,  Act  194);  names  and  post-office  addresses  of  the  stockholders 
and  number  of  shares  of  common  and  preferred  stock  held  by  each 
at  the  date  of  the  report;  name  and  post-office  address  of  each  officer 
and  director;  and  such  other  information  as  the  Secretary  of  State 
may  require.  One  copy  of  report  is  retained  by  Secretary  of  State, 
who  sends  the  other  to  the  clerk  of  the  county  in  which  the  domestic 
office  of  the  corporation  is  located.  § 12;  L.  1905,  Act  194.  Failure 
to  file  reports  is  deemed  to  be  wilful.  § 12.  Mining  companies  have 
special  reports.  C.  L.,  § 7022. 

Publication  is  required  only  of  notices  and  may  be  avoided  by 
waiver,  except  notices  of  sale  of  stock  for  assessment  or  to  enforce 
corporation’s  lien. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  It  is  unlawful  for  a foreign 
corporation  to  do  business  in  this  State  until  it  has  filed  and  recorded 
a certified  copy  of  its  charter  or  articles  of  incorporation  and  evidence 
of  appointment  of  an  agent  in  the  State  to  accept  service  of  process, 
with  the  Secretary  of  State,  and  paid  the  filing,  recording  and  fran- 
chise fees  to  be  determined  according  to  a statement  verified  by  its 
president,  secretary,  treasurer  and  superintendent,  or  any  two  of 
them,  in  such  form  as  the  Secretary  of  State  may  require.  Such  state- 
ment must  contain:  (1)  Location  of  the  office  or  offices  of  the  com- 

pany in  Michigan,  and  names  and  addresses  of  the  officers  and  agents 
in  charge  of  its  business  in  the  State.  (2)  Value  of  property  owned 
and  used  by  the  company  in  Michigan,  where  situated,  and  value  of 
property  owned  and  used  without  the  State.  (3)  Aggregate  amount 


202 


CLASSIFIED  CORPORATION  LAWS. 


(Michigan) 

of  business  transacted  by  the  company  during  the  preceding  year,  and 
the  proportion  transacted  in  the  State.  (4)  The  proportion  of  the 
capital  stock  represented  by  property  owned  and  used  and  business 
transacted  within  the  State,  and  such  other  facts  as  the  Secretary  of 
State  may  require.  Fee  to  be  one-half  mill  on  each  dollar  of  capital 
stock  represented  in  Michigan;  minimum  fee,  $25.  Same  fee  on  in- 
crease of  such  proportion  of  capital.  L.  1903,  Act  34. 

Penalties  for  Non-Compliance.  Fine  of  $1,000  for  every  month 
of  default  and  inability  to  sue  on  contracts  made  in  the  State  in  the 
courts  of  the  State.  L.  1903,  Act  34.  As  to  objects  and  period  of 
existence,  foreign  corporations  are  limited  by  the  laws  governing  do- 
mestic corporations.  L.  1901,  Act  206,  §§  1,  4. 

For  violations  of  statute  against  unlawful  monopolies  and  com- 
binations, they  are  proceeded  against  by  quo  warranto  or  injunction, 
and  Secretary  of  State  is  authorized  to  revoke  the  certificate  of  au- 
thority to  do  business  in  the  State.  L.  1899,  Act  255. 

Taxation.  No  special  provisions. 

Books.  Foreign  corporations  admitted  to  do  business  in  the 
State  are  subject  to  all  the  regulations  governing  domestic  corpora- 
tions. C.  L.,  § 7013;  L.  1901,  Act  206. 

Reports.  Same  as  of  domestic  corporations.  L.  1901,  Act  206, 
§ 5;  L.  1905,  Act  194.  The  Secretary  of  State  may  also  at  any  time 
require  additional  statements  as  to  property  used  and  business  trans- 
acted in  Michigan.  L.  1903,  Act  34. 

Attachments  Against.  Lie  against  on  the  ground  of  being  a for- 
eign corporation.  C.  L.,  § 721. 

15.  Combinations  and  Monopolies. 

Are  provided  against  by  C.  L.,  §§  11327-11383;  L.  1899,  Act  255 
and  L.  1905,  Acts  229,  329,  under  penalty  of  forfeiture  of  charter,  and 
fine  against  individuals  of  from  $50  to  $5,000  or  imprisonment  from 
six  months  to  one  year,  or  both,  each  day’s  violation  to  constitute  a 
separate  offense.  L.  1899,  Act  255,  § 4;  Detroit  Salt  Co.  v.  Salt  Co., 
134  Mich.  103  (1903). 


MINNESOTA. 


1.  Corporation  Laws.* 

Constitution.  (1857.)  Private  corporations  not  to  be  created  by- 
special  act.  Art.  X,  § 2.  Stockholders  except  of  corporations  engaged 
in  manufacturing  or  mechanical  businesses  are  individually  liable  to 
the  amount  of  stock  owned.  Id.,  § 3.  Stock  and  bonds  to  be  taxed. 
Art.  IX,  § 3.  Combinations  to  monopolize  markets  for  food  products 
or  interfere  with  freedom  of  markets  declared  criminal  conspiracy  to 
be  provided  against  by  law.  Art  IV,  §35  (1888). 

Statutes.  The  general  corporation  law  is  contained  in  Chapter 
34  of  the  General  Statutes  of  1894,  §§  2592-3436.  Of  this  chapter, 
Title  1 relates  to  corporations  exercising  the  right  of  eminent  domain 
and  Title  2 relates  to  other  corporations  for  profit.  Of  Title  2,  Part  1 
contains  general  provisions;  Parts  2 and  3 relate  specially  to  manu- 
facturing and  mining  corporations,  and  the  remainder  of  the  Title 
refers  to  loan,  safe  deposit  and  trust,  building  and  loan,  savings,  co- 
operative and  other  corporations.  Title  8 of  Chapter  34  contains 
general  provisions  applicable  to  all  corporations,  and  the  intervening 
Titles  refer  to  corporations  not  for  profit  and  to  insurance  and  road 
companies.  Banks  are  provided  for  in  Chapter  33. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer,  on  or  before  filing 
articles  of  incorporation:  $50  on  the  first  $50,000  or  fraction  thereof 
of  the  capital  stock,  and  $5  additional  for  every  $10,000  or  fraction 
thereof  in  excess  of  $50,000.  § 3391.  Corporations  confined  by  their 

articles  exclusively  to  manufacturing  are  not  subject  to  these  fees. 
Dairy  corporations  and  some  other  are  also  exempt.  L.  1901,  Ch.  245. 
Recording  with  Secretary  of  State,  15  cents  per  folio;  certified  copy 
of  articles,  50  cents  per  folio;  issuing  certificate  of  incorporation,  $1. 
For  recording  in  counties  and  for  copies,  10  cents  per  folio  (§  5567) 
but  7J4  cents  in  Ramsey  County  (St.  Paul),  (§  5571),  and  12^/2  cents 
per  folio  in  counties  where  salary  is  less  than  $800  per  annum.  § 5568. 
Publication  of  articles  of  incorporation,  75  cents  per  folio  first  inser- 
tion; 35  cents  for  each  subsequent  insertion  (§5581),  publication  cost 
usually  ranging  from  $10  to  $20. 

Franchise  Tax.  None  imposed. 

* References,  except  as  otherwise  noted,  are  to  the  General  Statutes  of  1894. 


203 


204 


CLASSIFIED  CORPORATION  LAWS. 


Local  Taxation.  Corporations  are  taxed  on  surplus  value  of 
stock  after  deducting  real  and  personal  property  taxed.  § 1530.  Real 
property  is  listed  biennially,  and  personal  property  annually  as  of 
May  1st.  Stock  and  franchise  are  listed  by  the  corporation  in  the 
district  where  principal  office  is  located.  §§  1514-1516.  Stockholders 
do  not  list  shares  of  companies  which  are  taxed  on  capital  and  prop- 
erty in  the  State.  § 1523. 

General.  On  renewal  of  corporate  existence,  same  fees  are  paid 
as  on  original  incorporation.  L.  1901,  Ch.  206.  On  increase  of  capital 
stock,  $5  on  each  $10,000  of  increase  or  fraction  thereof.  § 3392;  L. 
1901,  Ch.  245. 

3 Incorporation. 

Incorporators.  Must  be  three  or  more.  §§  2794,  2827.  No  re- 
quirements as  to  residence.  If  more  than  20  per  cent,  of  the  capital 
stock  is  held  by  aliens,  a corporation  can  not  own  real  estate  in  the 
State.  § 5876. 

Articles  of  Incorporation.  Are  to  be  signed  and  severally  ac- 
knowledged in  duplicate  by  the  incorporators  (§  2593),  and  must  con- 
tain (§  2594): 

(1)  Name  of  the  corporation,  general  nature  of  the  busi- 
ness, and  principal  place,  if  any,  of  transacting  the  same. 
Name  must  not  be  similar  to  that  of  any  other  corporation 
in  the  State.  § 2794. 

(2)  Time  of  commencement  and  period  of  continuance, 
not  exceeding  thirty  years.  §§  2802,  2826. 

(3)  Amount  of  capital  stock  and  how  to  be  paid  in.  Must 

not  be  less  than  $10,000.  § 2797. 

(4)  Highest  amount  of  liability  to  which  corporation  shall 
at  any  time  be  subject. 

(5)  Names  and  residences  of  the  incorporators. 

(6)  Names  of  the  first  board  of  directors,  and  in  what 
officers  or  persons  the  government  of  the  corporation  shall  be 
vested,  and  when  elected. 

(7)  Number  and  amount  of  shares  in  the  capital  stock. 
The  par  value  must  be  not  less  than  $1  nor  more  than  $100. 

§ 2797;  L.  1901,  Ch.  347. 

Filing  and  Recording.  The  articles  of  incorporation  must  be 
published  on  two  successive  days,  or  in  two  successive  weeks  if  paper 
is  a weekly,  in  a newspaper  published  at  the  State  capital  or  in  the 
county  where  the  principal  office  is  located.  § 2813.  An  affidavit  of 
such  publication  is  filed  in  office  of  Secretary  of  State.  § 2594;  L. 
1901,  Ch.  99.  One  copy  of  the  articles  of  incorporation  is  recorded 
with  the  Register  of  Deeds  of  the  county  where  the  principal  office  is 
located.  The  other  is  recorded  with  the  Secretary  of  State  (§§  2593, 
2829),  together  with  receipt  of  State  Treasurer  for  organization  tax. 


MINNESOTA. 


205 


§ 3393-  The  Secretary  of  State  issues  certificate  of  incorporation  in 
prescribed  form,  stating  the  names  of  the  subscribers,  the  name  of 
the  corporation,  the  corporate  business  and  the  amount  of  capital 
stock,  which  is  also  recorded  by  him.  § 3394. 

4.  Organization. 

First  Meetings.  Of  stockholders  must  be  held  within  the  State 
for  adoption  of  by-laws.  When  no  other  provision  is  made,  the  first 
meeting  must  be  called  by  notice,  stating  time,  place  and  purposes  of 
the  meeting,  signed  by  one  or  more  of  the  incorporators,  served  per- 
sonally or  published  at  least  twenty  days  before  the  meeting  in  a 
newspaper  published  in  the  county  of  its  location,  or,  if  none  there,  at 
the  capital  of  the  State.  § 3408. 

Until  otherwise  provided  by  by-laws,  the  incorporators  of  min- 
ing and  manufacturing  corporations  constitute  the  board  of  direc- 
tors with  full  power  and  authority  to  make  by-laws  and  manage  the 
business.  § 2831.  The  first  board  of  directors  of  other  corporations 
is  required  to  be  named  in  the  articles  of  incorporation.  § 2594.  They 
choose  one  of  their  number  as  president  and  elect  a secretary  and 
treasurer,  who  must  be  residents  of  the  State.  § 2811. 

By-Laws.  The  by-laws  may  determine  manner  of  calling  and 
conducting  meetings;  quorum;  number  of  shares  entitling  stock- 
holder to  vote;  mode  of  voting  by  proxy;  mode  of  selling  shares  for 
non-payment  of  assessments,  and  tenure  of  office  of  the  several  offi- 
cers and  may  impose  penalties,  not  exceeding  $20,  for  breach  thereof. 
§ 3412.  They  may  be  amended  by  the  directors,  trustees  or  commit- 
tee, subject  to  control  of  stockholders.  § 2831.  A certified  copy  of 
all  by-laws  of  mining  and  manufacturing  companies  and  of  amend- 
ments, must  be  recorded  with  the  Register  of  Deeds  where  the  articles 
of  incorporation  were  filed  and  also  with  the  Secretary  of  State.  Id. 

Certificates.  Before  beginning  business  a certificate,  signed  and 
sworn  to  by  the  president  and  a majority  of  the  directors,  must  be 
filed  with  the  Secretary  of  State  and  a duplicate  with  the  Register  of 
Deeds,  showing  the  purposes  for  which  the  company  was  formed, 
amount  of  capital  stock,  amount  actually  paid  in,  names  of  stock- 
holders and  number  of  shares  held  by  each.  § 2813.  Certificates  of 
payment  of  capital  stock  are  similarly  filed  within  thirty  days  after 
completed  payment  or  payment  of  any  instalment  thereof.  § 2813. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  proof  of  publication  of  articles  of 
incorporation  in  the  office  of  the  Secretary  of  State.  L.  1901,  Ch.  99. 
Not  to  continue  more  than  thirty  years.  §§  2802,  2826.  Mining  com- 
panies have  perpetual  succession.  § 2827.  Continues  three  years 
after  expiration,  annulment  or  forfeiture  to  close  affairs.  § 3431;  L. 
1905,  Ch.  128. 

Beginning  Business.  Business  may  not  be  commenced  until  after 
the  articles  of  incorporation  have  been  published  twice  in  a news- 
paper in  the  county  where  the  corporation  is  located  or  at  the  State 


20  6 


CLASSIFIED  CORPORATION  LAWS. 


capital,  and  certificate  thereof  has  been  filed.  (See  “Certificates,” 
under  § 4.) 

Renewal.  May  be  had  for  successive  terms  of  the  same  length 
as  originally  limited  in  the  articles  of  incorporation,  by  a two-thirds 
vote,  in  the  same  manner  as  other  amendments.  Copy  of  the  resolu- 
tion so  adopted,  certified  by  the  president  and  secretary  and  under 
the  corporate  seal,  must  be  filed,  recorded  and  published  in  the  same 
manner  as  provided  for  original  articles.  §§  2826,  3400;  L.  1901,  Ch. 
207. 

Forfeiture  of  Charter.  Is  accomplished  by  action  brought  by  the 
Attorney  General  for  violation  of  corporation  laws,  non-user  of  fran- 
chises, usurpation  of  powers,  etc.  §§  5961-5973.  Also  for  violation  of 
laws  against  trusts.  L.  1899,  Ch.  359.  Attorney  General  has  visitorial 
powers.  § 3436. 

Dissolution.  Voluntary  dissolution  may  be  had  by  petition  to 
the  district  court  of  a majority  in  number  or  interest  of  the  mem- 
bers or  stockholders.  §§  3430,  3432-3435. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated  with  but  few  restric- 
tions. §§  2595,  2794,  3407. 

To  Hold  Property.  May  be  held  to  the  extent  of  corporate  ne- 
cessities (§  2798)  and  when  taken  in  payment  of  or  as  security  for 
debts.  §§  2794,  2817,  2829,  2835.  Holdings  of  real  estate,  except  as  to 
railways,  canals  or  turnpike  corporations,  are  limited  to  5,000  acres. 
§ 5877.  Corporations  in  which  more  than  20  per  cent,  of  the  capital 
stock  is  held  by  aliens,  can  not  hold  real  property.  § 5876. 

Its  Own  Stock.  No  provisions. 

Stock  of  Other  Corporations.  Mining  corporations  may 
take,  acquire  and  hold  stock  in  any  other  corporation  if  a majority 
in  amount  of  the  stockholders  shall  so  elect.  § 2834. 

To  Borrow  Money.  The  extent  of  corporate  indebtedness  is  to 
be  limited  by  the  articles  of  incorporation.  § 2594. 

To  Do  Business  in  Other  States.  Is  permitted.  Offices  may  be 
established  and  stockholders’  and  directors’  meetings  be  held  without 
the  State.  §§  2801,  2833,  3407. 

Consolidation  or  Merger.  No  provisions. 

Amendment  of  Charter.  May  be  made  providing  for  anything 
which  might  have  been  included  in  the  original  articles,  by  a two- 
thirds  vote  of  the  stock.  §§  2803,  3400;  L.  1897,  Ch.  12.  Amended  ar- 
ticles to  be  executed,  filed,  recorded  and  published  in  the  same  man- 
ner as  original  articles.  §§  2595,  2807,  2829. 

7.  Capital  Stock. 

Amount.  Must  not  be  less  than  $10,000.  §§  2797,  2830;  L.  1901, 

Ch.  347. 


MINNESOTA. 


207 


Initial  Payment.  No  specific  provisions.  The  manner  of  paying 
capital  stock  is  to  be  prescribed  in  articles  of  incorporation.  § 2594. 

Consideration  for  Issue.  Shares  must  not  be  issued  for  less  than 
par  value,  except  in  the  case  of  railroad,  navigation,  mining,  manu- 
facturing, mercantile  and  real  estate  corporations,  which  are  given 
special  privileges.  §§  2832,  3415.  Fraud  in  stock  subscriptions  or 
stock  issues  is  a misdemeanor.  §§  6761,  6762. 

The  directors  may  call  in  subscriptions  to  the  capital  stock  by 
instalments,  in  such  proportions,  and  at  such  times  and  places  as  they 
think  proper,  on  notice  to  be  prescribed  by  by-laws.  Shares  are  for- 
feited on  sixty  days’  default  and  sale  may  be  had  on  thirty  days’  notice 
by  advertisement.  §§  2815,  3413.  Certificate  of  payment  of  each  in- 
stalment of  capital  stock  must  be  filed  by  directors  with  Secretary 
of  State  and  Register  of  Deeds  within  30  days  of  payment  thereof. 
§ 2813. 

Increase  or  Decrease.  Capital  stock  may  be  increased  at  any 
meeting  of  the  stockholders  specially  named  for  that  purpose.  §§  2595, 
3398.  Certificate  thereof,  signed  and  sworn  to  by  the  president  and 
directors  must  be  filed  and  recorded  as  were  original  articles.  §§  2595, 
2820,  3399;  L.  1901,  Ch.  245. 

Classes  of  Stock.  May  be  provided  for  in  the  articles  of  incor- 
poration or  may  be  authorized  by  a majority  of  the  stockholders  at 
any  annual  meeting,  or  special  meeting  called  for  that  purpose,  and 
when  so  authorized  may  be  issued  by  the  board  of  directors  on  such 
terms  as  they  deem  best.  § 3415. 

Par  Value  of  Shares.  Must  be  not  less  than  $1  and  not  more 
than  $100.  L.  1901,  Ch.  347.  Of  manufacturing  companies,  not  less 
than  $10  nor  more  than  $100.  § 2806;  L.  1897,  Ch.  249. 

Stock  Certificates.  Every  owner  of  shares  is  entitled  to  a cer- 
tificate when  his  fees  or  dues  are  paid  showing  the  number  of  shares 
to  which  he  is  entitled.  § 3416. 

Transfer  of  Stock.  Is  to  be  regulated  by  the  by-laws.  §2832. 
Transfer  is  not  valid  until  entered  on  the  books  of  the  corporation, 
except  as  between  the  parties,  and  does  not  exempt  the  transferee 
from  liability  on  the  transferred  stock.  § 2599. 

8.  Stockholders. 

Rights  and  Powers.  Stockholders  control  amendments  by  a 
two-thirds  vote.  Meetings  can  be  compelled  by  stockholders  through 
warrant  of  justice  of  the  peace  on  application  of  three  or  more  stock- 
holders. §§3408-3411.  A majority  of  members  of  mining  companies 
may  call  meetings  by  publication  for  thirty  days  in  the  county  where 
corporation  is  located,  or  if  no  newspaper  there,  at  the  capital  of  the 
State.  § 2832.  Such  vote  is  also  necessary  to  sell  or  mortgage  real 
estate  of  any  such  corporation.  § 2835. 

Liability.  Under  the  Constitution,  stockholders  (except  of  manu- 
facturing and  mechanical  corporations)  are  liable  for  the  corporate 
debts  to  the  amount  of  stock  owned.  Const.,  Art.  X,  §3;  L.  1899, 


208 


CLASSIFIED  CORPORATION  LAWS. 


Ch.  272;  Bank  v.  Co.,  90  Minn.  144  (1903);  Anderson  v.  Co.,  65  Minn. 
281  (1895).  This  liability  is  in  addition  to  any  amount  due  for  unpaid 
subscriptions. 

The  private  property  of  each  stockholder  is  liable  for  corporate 
debts:  (1)  For  unpaid  subscription  on  stock  owned  by  him  or  trans- 
ferred to  defraud  creditors.  (2)  For  a failure  to  comply  substantially 
with  the  provisions  as  to  organization  and  publicity.  (3)  For  person- 
al violation  of  the  corporation  law,  or  any  fraud,  or  unfaithfulness  in 
official  duty.  § 2600.  He  may  be  sued  with  corporation  and  his 
liability  determined,  and  execution,  when  returned  unsatisfied  as 
against  the  corporation,  is  levied  on  stockholders’  property.  §§  2601, 
2602,  2822. 

Meetings.  May  be  held  without  the  State  if  the  by-laws  so  pro- 
vide. §§  2833,  3407. 

Notice.  Is  to  be  prescribed  by  by-laws.  §3412.  Meetings  may, 
however,  always  be  called  by  a majority  of  the  members  by  publica- 
tion for  thirty  days  in  a newspaper  published  at  the  place  of  its 
office,  and  if  none  there,  at  the  State  capital.  §§  2832,  3408.  When 
all  members  are  present  and  sign  written  consent  on  the  record,  no- 
tice may  be  waived.  §3411. 

In  case  of  failure  to  hold  annual  meeting  for  two  consecutive 
years,  stockholders  owning  one-third  of  the  stock  may  call  meeting, 
at  which  one-third  shall  be  a quorum.  L.  1903,  Ch.  152.  In  an  emer- 
gency, meeting  may  be  called  on  warrant  issued  by  a justice  of  the 
peace  on  application  of  three  or  more  members.  §§3408-3411. 

Quorum.  A majority  of  the  stock  is  a quorum  and  a majority 
of  the  stockholders  present  in  person  or  by  proxy  decide.  § 2814. 

Voting.  Each  share  has  one  vote  (§§2814-2830)  unless  by-laws 
provide  otherwise.  §§  2814,  3412. 

Proxies.  Are  to  be  regulated  by  by-laws.  § 3412.  Must  be  in 
writing.  § 2830. 


9.  Directors. 

General.  Directors  are  elected  annually  for  one  year.  § 2809. 
They  may  be  divided  into  three  classes,  however,  each  elected  by 
rotation  for  three  years.  § 3407.  May  be  removed  by  court.  § 5895. 

Number.  Must  be  not  less  than  three  nor  more  than  fifteen. 
§§  2809,  3398.  The  number  may  be  changed  by  regular  amendment. 
§§2595,  3398,  3399- 

Qualifications.  They  must  be  stockholders.  §2809.  No  require- 
ments as  to  residence. 

Powers.  They  fill  vacancies  for  the  current  year.  § 2812.  They 
may  make  and  amend  by-laws,  subject  to  repeal  or  approval  of  stock- 
holders at  regular  meeting.  §2831. 

Liability.  If  the  directors  declare  and  pay  a dividend  when  the 
company  is  insolvent  or  which  would  render  it  insolvent,  those  as- 
senting are  jointly  and  severally  liable  for  the  corporate  debts  at  the 
time  of  such  dividend.  § 2823.  For  any  intentional  violation  of  the 
law,  the  directors  and  officers  guilty  render  themselves  liable  for  the 


MINNESOTA. 


209 


corporate  debts.  §§  2824,  2825.  There  are  penal  provisions  for  false 
reports,  fraudulent  issue  of  shares,  etc.  §§  6699,  6700,  6761-6766. 

Meetings.  May  be  held  without  the  State  if  the  by-laws  so  pro- 
vide. §§2833,  3407.  A quorum  requires  a majority.  §2814.  Where 
all  are  present  and  acting,  notice  is  immaterial.  Times  Co.  v. 
Nimocks,  53  Minn.  381  (1893). 

Executive  Committee.  May  be  provided  for  in  articles  or  by- 
laws. §2831. 

10.  Officers. 

General.  A president,  who  must  be  a director,  is  prescribed,  and 
also  a secretary  and  a treasurer,  who  must  be  residents  and  keep 
their  place  of  business  with  the  corporate  books  within  the  State. 
§2811.  A transfer  agent  in  the  State  may  be  a corporation  or  a 
person.  L.  1897,  Ch.  165. 

Liability.  (See  § 9,  “ Directors.”)  The  directors  are  charged 
with  all  the  acts  really  transacted  by  specific  officers,  and  are  made 
liable  for  omissions  or  neglects  therein.  For  refusal  to  exhibit  list  of 
stockholders  and  transfer  book,  there  is  a fine  of  $250  to  be  recovered 
from  the  person  refusing  examination  by  the  person  demanding  the 
same.  L.  1897,  Ch.  165. 

11.  Principal  Office. 

The  directors  may  establish  one  or  more  offices  without  the 
State  and  transact  business  thereat;  but  an  office  must  always  be 
maintained  within  the  State  where  legal  process  may  be  served  upon 
the  person  in  charge  thereof.  §§  2801,  2811,  2833.  May  be  changed 
by  regular  amendment  of  articles  of  incorporation.  § 2595. 


12.  Corporate  Books. 

What  Required.  A stock  transfer  book  is  prescribed,  to  show 
by  and  to  whom  stock  is  transferred,  number  of  shares  and  date  of 
transfer.  The  books  of  the  company  must  be  kept  so  as  to  show 
intelligibly  the  original  stockholders,  their  respective  interests,  the 
amount  paid  in  on  their  shares  and  all  transfers  thereof.  § 2599. 

Books  showing  all  business  transactions  (§  2800)  and  books  of 
account  prescribed.  § 2818.  Minutes  of  meetings  must  be  kept. 
§ 2831. 

Where  Kept.  At  the  place  of  business  kept  by  the  secretary  and 
treasurer  within  the  State.  §§  2811,  2818,  2831. 

Examination  of.  The  corporate  books  and  records  shall  at  all 
reasonable  times  be  open  to  the  inspection  of  stockholders  (§§  2599, 
2831);  and  the  directors  shall  once  a year  and  when  required,  pre- 
sent to  the  stockholders  in  writing  financial  reports.  §§  2800,  2818. 
The  transfer  agent  must  exhibit  to  any  stockholder  on  demand,  dur- 
ing usual  business  hours,  the  transfer  book  and  list  of  stockholders, 


210 


CLASSIFIED  CORPORATION  LAWS. 


on  penalty  for  refusal  of  $250  to  the  person  demanding  examination. 

L.  1897,  Ch.  165. 

13.  Reports. 

The  president,  secretary  or  principal  accounting  officer  of  any 
company,  except  railroad,  insurance  or  telegraph  companies  and 
banking  corporations,  whose  taxation  is  specially  provided  for,  shall 
make'out  and  deliver  to  the  assessor  annually  a sworn  statement  of  its 
stock,  setting  forth  particularly:  (1)  Name  and  location.  (2)  Capital 
stock  and  number  of  shares.  (3)  Amount  of  capital  stock  paid  up. 
(4)  Market  value,  if  any;  if  none,  the  actual  value  of  the  shares  of 
stock.  (5)  Total  amount  of  all  indebtedness  except  indebtedness  for 
current  expenses,  excluding  from  such  expenses  the  amounts  paid 
for  purchase  or  improvement  of  property.  (6)  Value  of  all  real  prop- 
erty, if  any.  (7)  Value  of  personal  property.  § 1530. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  A foreign  corporation  must  file 
authenticated  copy  of  charter  with  the  Secretary  of  State,  and  a 
sworn  statement  showing  the  proportion  of  its  capital  stock  repre- 
sented by  property  located  and  business  transacted  in  the  State,  and 
must  pay  the  same  fees  as  domestic  corporations  on  the  capital  stock 
employed  in  the  State.  Its  license  continues  thirty  years  but  may 
be  renewed  for  like  periods  by  re-filing  articles  and  paying  fees. 

Any  such  corporation  must  before  it  can  be  authorized  to  transact 
any  business  in  the  State  or  acquire  or  hold  any  property,  establish 
a public  office  in  the  State  and  appoint  an  agent  residing  in  the  same 
county  on  whom  process  may  be  served,  and  a duly  authenticated  copy 
of  the  appointment  of  such  agent  must  be  filed  with  the  Secretary 
of  State.  Limitations  on  holding  real  estate  exist.  Secretary  of 
State  issues  a certificate  of  compliance.  §§  3420,  5816;  L.  1899,  Chs. 
69,  70;  Lehigh  Valley  Coal  Co.  v.  Gilmore,  93  Minn.  432  (1904);  Rock 
Island  Co.  v.  Peterson,  93  Minn.  356  (1904). 

Penalties  for  Non-Compliance.  Fine  of  $1,000  to  $10,000  and  in- 
ability to  sue  in  the  State  courts.  §§  3421,  3422.  Right  to  do  busi- 
ness in  the  State  is  forfeited  for  transferring  suits  to  Federal  courts 
contrary  to  law.  § 3427. 

Taxation.  Same  as  of  domestic  corporations.  There  is  retalia- 
tory taxation  of  foreign  insurance  companies.  § 3138.  A tax  on 
gross  earnings  of  railroad  corporations  is  provided  for.  § 2753;  L. 
1903,  Ch.  253. 

Books.  A transfer  agent  must  at  all  times  exhibit  to  stock- 
holders, transfer  book  and  list  of  stockholders  when  requested,  on 
penalty  of  $250.  L.  1897,  Ch.  165. 

Reports.  Stockholders’  liability  under  Minnesota  statutes  not 
enforceable  on  stockholders  of  a foreign  corporation  doing  business 
in  State,  but  creditor’s  bill  will  lie.  Rule  v.  Co.,  64  Minn.  326  (1896). 

Attachments  Against.  Lies  on  the  ground  of  being  a foreign 
corporation.  §§  5211,  5289. 


MINNESOTA. 


21 1 


15.  Combinations  and  Monopolies. 

Are  declared  criminal  conspiracy  by  Constitution,  Art.  IV,  § 35 
(amendment,  1888),  particularly  as  to  monopolizing  markets  for  food 
products.  Laws  passed  to  carry  this  into  effect  are  found  in  R.  S., 
§§  6955-57,  L.  1899,  Ch.  359,  and  L.  1901,  Ch.  194,  with  penalties  of 
fines  from  $500  to  $5,000,  imprisonment  three  to  five  years  and  for- 
feiture of  charter.  L.  1901,  Ch.  194,  adds  provision  for  threefold 
damages  to  person  injured. 


MISSISSIPPI. 


1.  Corporation  Laws.* 

Constitution.  (1890.)  Corporations  not  to  be  created  by  special 
act,  nor  for  longer  than  ninety-nine  years.  § 178.  Business  must  be 
commenced  within  two  years.  § 180.  Corporate  property  to  be  taxed 
in  the  same  way  and  to  the  same  extent  as  that  of  individuals.  § 181. 
Legislature  may  by  general  law  grant  five  years’  exemption  from 
taxation  to  encourage  manufactures  or  new  enterprises  of  public 
utility.  § 182.  Municipalities  may  exempt  such  enterprises  from  local 
tax  for  ten  years.  § 192.  Corporate  charters  to  be  recorded  in  the 
Chancery  Clerk’s  office  of  the  county  where  the  principal  office  or 
place  of  business  is  located.  § 189.  Voting  by  proxy  and  cumulative 
voting  prescribed.  § 194.  Legislature  required  to  pass  anti-trust 
law.  § 198.  No  person  interested  in  a competing  business  shall  be  a 
director  of  a corporation  without  the  consent  of  a majority  of  the 
stock.  § 194. 

Statutes.  The  general  corporation  law  is  contained  in  the  Code 
of  1892,  Chapter  25,  §§  832-860,  and  subsequent  amendatory  and  sup- 
plemental acts.  Under  it  corporations  may  be  formed  for  any  lawful 
purpose  except  for  the  construction  and  operation  of  railroads  other 
than  street  railways,  or  non-mutual  insurance  companies.  L.  1898, 
Ch.  73.  Chapter  112  of  the  Code  treats  of  railroads,  and  Chapter  65 
of  insurance  companies. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State  for  recording 
charter:  Capital  stock  not  exceeding  $10,000,  $20;  over  $10,000  but 

not  exceeding  $30,000,  $40;  over  $30,000  but  not  exceeding  $50,000, 
$60;  over  $50,000,  $60  and  one-tenth  of  one  per  cent,  on  amount  in 
excess  of  $50,000;  no  fee  to  exceed  $250.  L.  1900,  Ch.  45.  For  certified 
copy,  $10.  Id.  For  publication,  about  $10. 

To  Clerk  of  Court  of  Chancery  in  county  of  principal  office,  for 
recording  charter  and  issuing  certificate,  15  cents  per  100  words; 
minimum  fee,  $2.50.  § 1991. 

Franchise  Tax.  None  imposed  on  business  corporations. 

Local  Taxation.  Creameries  and  factories  and  plants  for  mak- 
ing and  working  textile  materials,  minerals,  cements,  metals,  agri- 
cultural implements,  machinery,  vehicles,  shoes,  clothing,  barrels  or 

* References  are  to  Code  of  1892,  except  as  otherwise  noted. 


212 


MISSISSIPPI. 

Enactments  of  1906. 


5.  Corporate  Existence. 

Forfeiture  of  Charter.  May  result  from  any  use  of  capital  not 
authorized  by  charter  or  incident  thereto.  L.  1906,  Ch.  252,  p.  283. 

6.  Corporate  Powers. 

General.  No  corporation  may  employ  its  capital  in  anything  but 
its  legitimate  business  under  penalty  of  forfeiture  of  charter.  L.  1906, 
Ch.  252,  p.  283. 

To  Hold  Property.  A corporation  may  hold  proper  personal 
property  in  any  amount  necessary,  and  may  hold  land  required  for 
its  purposes  to  amount  of  one  million  dollars.  Manufacturing 
corporations  may  hold  land  to  amount  of  two  million  dollars 
exclusive  of  buildings  and  fixtures.  No  corporation  may  have  any 
use,  part  or  benefit  in  land  to  greater  amount  than  it  is  allowed  to 
hold  by  law  nor  employ  its  capital  in  anything  but  its  legitimate  busi- 
ness. Penalty  for  violation  of  these  provisions  is  forfeiture  of  charter 
and  forfeiture  to  State  of  all  lands  held  in  excess  of  lawful  amount. 
L.  1906,  Ch.  252,  p.  283. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  In  addition  to  the  method  pro- 
vided for  obtaining  authority  to  do  business  provided  in  L.  1900,  Ch. 
45,  foreign  corporations,  if  they  so  elect,  may  become  re-incorporated 
in  the  State  by  filing  charter  for  approval  and  after  approval  paying 
fees  as  for  domestic  corporations,  thereby  obtaining  the  status  of 
domestic  corporations.  L.  1906,  Ch.  114,  p.  102;  also  §§  915-918,  Miss. 
Code  of  1906. 


MISSISSIPPI.  . 


213 


boxes,  or  other  articles  of  use  in  a finished  state,  constructed  or  in 
process  of  construction  before  January  1st,  1910,  are  exempt  from  all 
state,  county  or  levee  taxes  for  a period  of  five  years  from  date  of 
granting  charter.  Municipalities  may  exempt  such  corporations  from 
taxation  for  ten  years.  Const.,  Art.  7,  §§  182,  192;  L.  1900,  Ch.  48;  L. 
1904,  Ch.  126.  Most  corporations  with  special  franchises  are  subject 
to  the  license  tax  imposed  upon  various  industries  whether  incor- 
porated or  otherwise.  §§  3317-3412;  L.  1902,  Ch.  54;  L.  1904,  Ch.  76. 

General.  For  recording  amendment  to  charter,  $5;  filing  articles 
of  consolidation,  $25;  any  other  articles  of  agreement  between  cor- 
porations, $20.  For  filing  certificates  by  officers,  $2.  L.  1900,  Ch.  45. 

3.  Incorporation. 

Incorporators.  Must  be  two  or  more.  No  requirements  as  to 
residence.  § 833. 

“Charter  of  Incorporation.”  Must  be  signed  and  acknowledged 
by  each  of  the  incorporators,  and  contain  a clear  and  definite  state- 
ment of  (§  833) : 

(1)  Purposes  for  which  the  corporation  is  created. 

(2)  Names  of  the  incorporators. 

(3)  Corporate  name.  No  restrictions. 

(4)  Powers  to  be  exercised. 

(5)  Period.  Not  more  than  fifty  years. 

“ Together  with  whatever  else  may  be  proper  to  be  stated.”  § 833. 

The  last  quoted  provision  gives  wide  scope  for  the  introduction 
of  additional  clauses  regulating  the  corporate  affairs.  The  statutes 
do  not  require  that  the  capital  stock  be  stated  in  the  charter  but,  in 
practice,  it  is  included. 

Filing  and  Recording.  The  charter  is  published  three  successive 
weeks  in  one  or  more  newspapers  of  the  county  in  which  the  pro- 
posed corporation  is  to  be  domiciled,  or  if  none  there,  in  one  or  more 
newspapers  of  the  State  having  circulation  in  such  county.  § 833. 
It  is  then  submitted  to  the  Governor,  who,  on  favorable  report  from 
the  Attorney  General  as  to  the  constitutionality  and  legality  of  its 
provisions,  endorses  his  approval  on  the  charter  and  causes  the  Sec- 
retary of  State  to  affix  the  great  seal.  The  Governor  may  require 
changes  or  withhold  his  approval  entirely.  § 833.  The  approved 
charter  is  then  recorded  with  the  Secretary  of  State  and  the  Clerk  of 
the  Chancery  Court  of  the  county  in  which  the  corporation  is  to  carry 
on  its  business.  § 835;  Const.,  § 189. 

4.  Organization. 

First  Meetings.  Unless  otherwise  provided  for,  the  first  meeting 
of  the  “persons  in  interest”  may  be  called  on  notice  signed  by  one 


214 


CLASSIFIED  CORPORATION  LAWS. 


or  more  persons  named  in  the  charter  and  published  in  some  con- 
venient newspaper  for  at  least  ten  days  before  the  time  appointed 
for  the  meeting.  § 836. 

At  this  meeting  by-laws  are  usually  adopted  and  directors  are 
elected.  The  meeting  must  be  held  within  the  State.  § 836. 

The  first  directors’  meeting  usually  follows  closely,  and  at  this 
meeting  the  officers  of  the  company  are  elected. 

By-Laws.  The  power  to  make  all  necessary  by-laws  is  granted 
in  general  terms.  § 836. 

Certificates.  None  prescribed  to  show  completed  organization, 
but  proof  of  publication  is  required  on  presenting  charter  to  Governor 
for  approval.  § 833. 

5.  Corporate  Existence. 

When  Commenced.  As  soon  as  charter  approved  by  Governor 
has  been  duly  recorded  with  payment  of  organization  tax.  Is  limited 
to  fifty  years.  § 833.  Continues  three  years  after  dissolution  or  ex- 
piration for  winding  up  affairs.  § 848. 

Beginning  Business.  May  be  commenced  forthwith,  and  must  be 
begun  within  two  years.  Const.,  § 180. 

Renewal.  Any  corporation  desiring  renewal  of  charter  must  ob- 
serve the  same  requirements  as  to  publication  as  in  case  of  original 
charter,  and  it  shall  be  sufficient  for  the  Governor  to  give  a certifi- 
cate that  the  original  charter  is  renewed  under  the  great  seal  of  the 
State.  § 834.  The  charter  must  also  be  recorded  anew.  § 835. 

Forfeiture  of  Charter.  Charter  is  forfeited  if  organization  does 
not  take  place  within  two  years  from  incorporation.  Const.,  § 180. 
Forfeiture  also  results  from  violation  of  the  law  against  trusts  and 
combines,  which  includes  engaging  in  any  business  not  expressly  au- 
thorized by  the  charter  or  fairly  and  reasonably  incidental  thereto. 
L.  1900,  Ch.  88.  Violation  of  the  provision  limiting  the  property  hold- 
ing power  of  corporations  is  ground  for  forfeiture.  § 838.  Quo  war- 
ranto lies  for  abuse  or  non-user  of  powers.  §§  3520-3539. 

Dissolution.  No  specific  provisions.  Reference  is  made  to  dis- 
solution by  judgment  of  court.  §§  847,  848. 

6.  Corporate  Powers. 

General.  The  usual  general  powers  are  enumerated  broadly. 
§ 836.  No  corporation,  domestic  or  foreign,  may  engage  in  any  busi- 
ness not  expressly  authorized  in  its  charter,  or  fairly  and  reasonably 
incidental  thereto.  L.  1900,  Ch.  88. 

To  Hold  Property.  This  power  is  limited  to  property  not  ex- 
ceeding $250,000  in  value,  except  in  the  case  of  manufacturing  and 
banking  companies,  which  may  hold  property  to  the  value  of  one 
million  dollars.  § 838;  L.  1897,  Ch.  14;  Const.,  § 84. 

Its  Own  Stock.  No  statutory  provisions. 


MISSISSIPPI. 


215 


Stock  of  Other  Corporations.  No  corporation  shall  di- 
rectly or  indirectly  own  stock,  franchise  or  equipment  of  a compet- 
ing corporation  in  the  same  kind  of  business.  L.  1900,  Ch.  88,  § 5. 
If  one  corporation  has  transferred  all  its  assets  to  another,  and  ceased 
to  do  business,  this  does  not  constitute  a technical  consolidation  or 
merger  but  is  attended  by  the  same  results  so  far  as  the  rights  of 
creditors  are  concerned,  the  property  of  the  merged  corporation  in 
the  hands  of  the  purchasing  corporation  being  subject  to  their  de- 
mands. Vicksburg,  etc.  Co.  v.  Co.,  79  Miss.  341  (1901). 

To  Borrow  Money.  The  power  to  borrow  money,  and  secure 
same  by  mortgage  or  otherwise,  to  issue  bonds  and  hypothecate  the 
corporate  franchises,  is  given  in  general  terms.  § 836.  As  to  manu- 
facturing and  trading  corporations,  however,  the  power  is  limited  by 
the  amount  of  paid  up  capital  stock.  § 853.  A mortgage  or  deed  of 
trust  conveying  the  franchises,  income  or  future  earnings  of  the  cor- 
poration, shall  not  be  valid  against  debts  contracted  in  carrying  on 
the  corporate  business.  § 839. 

To  Do  Business  in  Other  States.  No  statutory  provisions.  Pro- 
vision might  be  made  therefor  in  charter  or  by-laws.  Unless  re- 
strained by  law,  charter  or  by-laws,  directors  have  power  to  meet 
in  another  state  and  to  issue  bonds  and  secure  them  by  mortgage  of 
corporate  assets.  Thompson  v.  Water  Co.,  68  Miss.  423  (1890). 

Consolidation  or  Merger.  The  only  direct  provision  in  the  statute 
is  a fee  prescribed  for  filing  articles  of  consolidation,  $25.  L.  1900, 
Ch.  45.  And  the  power  to  consolidate  would  seem  to  be  limited  by 
the  regulations  against  trusts  and  combinations.  L.  1900,  Ch.  88,  § 5. 
The  power  to  consolidate  is  recognized  and  rights  of  parties  com- 
mented upon  in  Morrison  v.  American  Snuff  Co.,  79  Miss.  330  (1901). 

Amendment  of  Charter.  Amendments  are  made,  approved,  pub- 
lished and  recorded  in  same  manner  as  original  charter.  §§  834,  835. 

7.  Capital  Stock. 

Amount.  Initial  Payment.  No  provisions.  May  be  fixed  by 
charter  or  by-laws. 

Consideration  for  Issue.  No  note,  obligation  or  security  shall 
be  considered  as  payment  of  any  part  of  the  capital  stock.  § 850. 
The  capital  stock,  in  absence  of  contrary  charter  provision,  may  be 
paid  for  in  property  at  its  actual  value.  Fargason  v.  Co.,  78  Miss.  65 
(1900). 

Instalments  overdue  may  be  sued  for,  or  stock  may  be  sold. 
§ 843- 

Increase  or  Decrease.  No  express  provisions.  Majr  undoubtedly 
be  accomplished  by  amending  charter. 

Classes  of  Stock.  Par  Value  of  Shares.  Stock  Certificates.  No 

provisions. 

Transfer  of  Stock.  Stock  is  transferable  by  endorsement  and 
delivery  of  the  certificates  and  the  registry  of  such  transfer  on  the 


21 6 


CLASSIFIED  CORPORATION  LAWS. 


books  of  the  corporation.  Liability  for  corporate  debts  continues  one 
year  after  transfer.  § 844;  Scherck  v.  Montgomery,  81  Miss.  426 
(1902). 

8.  Stockholders. 

Rights  and  Powers.  The  provisions  of  the  Code  are  very  meagre. 
The  respective  rights  and  powers  of  stockholders  and  directors  may 
be  outlined  in  the  charter.  On  dissolution,  assets  vest  pro  rata  in 
stockholders  as  tenants  in  common,  subject  to  corporate  debts.  § 847. 

Liability.  Stockholders  are  individually  liable  to  amount  of  un- 
paid subscriptions,  for  corporate  debts  contracted  during  their  own- 
ership of  stock,  and  may  be  sued  by  any  corporate  creditor.  This 
liability  continues  one  year  after  transfer  of  the  stock.  § 844. 

Meetings.  The  Code  being  silent,  all  meetings  of  stockholders 
must  be  held  within  the  State.  Notice  and  quorum  are  not  pre- 
scribed, being  left  for  regulation  by  charter  or  by-laws. 

Voting.  The  corporation  may  prescribe  the  number  of  shares 
that  shall  entitle  a member  to  vote.  Cumulative  voting  is,  however, 
prescribed  for  elections  of  directors,  the  number  of  stockholders’ 
votes  to  be  determined  by  the  number  of  directors,  multiplied  by  the 
number  of  shares  owned  by  each  stockholder.  § 837;  Const.,  § 194. 

Proxies.  Voting  by  proxy  is  permitted,  the  mode  of  so  doing  to 
be  prescribed  by  by-laws.  § 836. 

9.  Directors. 

Number.  No  provisions. 

Qualifications.  A person  engaged  or  interested  in  any  competing 
business,  either  individually  or  as  employee  or  stockholder,  shall  not 
serve  on  the  board  of  directors  without  the  consent  of  a majority  in 
interest  of  the  stockholders.  § 837. 

Powers.  No  unusual  powers  conferred  by  statute. 

Liability.  Loans  to  stockholders  are  prohibited,  and  officers  as- 
senting thereto  render  themselves  jointly  and  severally  liable  for  cor- 
porate debts  to  the  extent  of  the  loan.  § 851.  For  dividends  or  capital 
withdrawn  when  company  is  insolvent,  or  which  would  render  it  in- 
solvent, the  assenting  directors  and  the  stockholders  receiving  the 
same,  are  jointly  and  severally  liable  for  existing  corporate  debts  to 
the  extent  of  such  dividends.  § 852.  For  permitting  corporate  debts 
to  exceed  capital  stock,  directors  of  manufacturing  or  trading  com- 
panies become  individually  liable  for  the  excess.  § 853. 

Meetings.  No  specific  provisions  except  that  the  manner  of  call- 
ing and  conducting  meetings  is  to  be  prescribed.  § 836.  If  directors’ 
meetings  are  to  be  held  outside  the  State  the  charter  or  by-laws  should 
so  provide.  Thompson  v.  Co.,  68  Miss.  423. 

Executive  Committee.  No  specific  provisions. 


MISSISSIPPI. 


217 


10.  Officers. 

General.  The  Code  provides  for  the  election  of  all  necessary 
officers.  A president  and  secretary  are  mentioned  in  execution  of 
papers.  For  violations  of  law  against  trusts  and  combines,  officers 
or  agents  guilty  thereof  are  liable  to  fine  of  from  $100  to  $5?°°°  and 
imprisonment  of  not  less  than  three  nor  more  than  twelve  months. 
L.  i8q8,  Ch.  72;  L.  1900,  Ch.  88.  (See  “Directors’  Liability,”  under 
§ 9.) 


11.  Principal  Office. 

No  direct  provisions.  By  implication  a principal  office  is  to  be 
maintained  in  the  State. 


12.  Corporate  Books. 

What  Required.  None  prescribed  though  transfer  books  are  men- 
tioned as  a necessary  feature  in  transfers  of  stock.  § 844. 

Where  Kept.  Examination  of.  No  provisions. 


13.  Reports. 

None  required.  Publication  is  required  of  charter,  of  notice  of 
sale  of  forfeited  stock  and  of  all  amendments,  for  three  weeks. 
§§  833>  835,  843.  Also  of  first  meeting,  for  ten  days,  unless  other  notice 
be  prescribed.  § 836. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  A foreign  corporation  doing 
business  in  the  State  must  file  with  the  Secretary  of  State  a duly 
authenticated  copy  of  charter  or  certificate  of  incorporation,  certi- 
fied by  its  president  and  secretary  or  other  chief  officers  under  the 
corporate  seal,  and  must  pay  a filing  fee  of  $15.  The  Secretary  of 
State  issues  certificate  of  authority.  For  a certified  copy  of  a foreign 
charter,  the  fee  is  $10.  L.  1900,  Ch.  45. 

Penalties  for  Non-Compliance.  Fine  of  not  less  than  $100.  Id. 
Foreign  corporations  are  subject  to  the  anti-trust  laws.  L.  1900,  Ch. 
88;  L.  1902,  Ch.  62. 

Taxation.  No  special  provisions. 

Books  and  Reports.  None  prescribed. 

Attachments  Against.  Lie  on  ground  of  being  foreign  corpora- 
tion. § 129;  Morrison  v.  Co.,  79  Miss.  330  (1901). 


218  classified  corporation  laws. 

(Mississippi) 

15.  Combinations  and  Monopolies. 

Constitution,  § 198,  directs  legislation  to  prevent  trusts,  and  by 
L.  iqoo,  Ch.  88  (repealing  earlier  laws),  they  are  declared  to  be  in- 
imical to  public  welfare,  unlawful  and  a criminal  conspiracy.  Cor- 
porate charters  and  right  to  do  business  in  the  State  to  be  forfeited 
for  violation.  Persons  injured  may  recover  double  the  amount  paid 
by  them  for  any  commodity  or  service  affected  by  such  trust  or  com- 
bine. Exemption  from  taxation  forfeited  for  violation  of  the  act. 
L.  1904,  Ch.  126,  § 4.  Officers  are  fined  and  imprisoned.  L.  1900, 
Ch.  88,  § 4.  The  Attorney  General  must  bring  quo  warranto  against 
offending  corporations.  Id. 


MISSOURI. 


i.  Corporation  Laws.* 

Constitution.  (1875.)  Public  ownership  or  interest  in  private 
corporations  forbidden.  Art.  IV,  §§  45-49.  Also  special  laws  creat- 
ing or  affecting  corporations  (Id.,  § 53),  except  those  under  State 
control.  Art.  XII,  § 2.  Cumulative  voting  at  elections  of  directors 
prescribed.  Id.,  § 6.  Corporations  not  to  engage  in  business  other 
than  expressly  authorized  by  charter,  nor  hold  real  estate  over  six 
years,  unless  necessary  to  legitimate  business.  Id.,  § 7-  Stock  or 
bonds  not  to  be  issued  except  for  money  paid,  labor  done  or  property 
actually  received;  all  fictitious  issues  void,  and  no  increase  to  be  had 
except  under  general  law  with  consent  of  a majoritv  of  the  stock  on 
sixty  days’  notice.  Id.,  § 8.  No  stockholder  to  be  liable  for  cor- 
porate debts  above  the  amount  of  stock  owned.  Id.,  § 9.  Preferred 
stock  to  be  issued  only  on  consent  of  all  the  stockholders.  Id.,  § 10. 
Public  office  in  State  prescribed,  with  stock  and  transfer  books  there- 
in. Id.,  § 15. 

Statutes.  The  corporation  law  of  Missouri  is  found  in  the  Re- 
vised Statutes  of  1899,  Chapter  12,  of  which  Article  I contains  general 
provisions,  Article  IX  refers  specially  to  manufacturing  and  busi- 
ness corporations,  and  the  intervening  and  subsequent  Articles  treat 
specially  of  railroad,  street  railway,  road,  telegraph  and  telephone, 
banking,  saving  and  building  and  loan,  trust,  safe  deposit,  booming 
and  rafting,  express,  bond  investment,  educational  and  benevolent, 
and  other  corporations.  Amendments  are  found  in  Laws  of  1901, 
1903  and  1905,  the  latter  chiefly  affecting  bridge  and  railroad  corpor- 
ations. 

Manufacturing  and  business  corporations  may  be  incorporated 
for  any  kind  of  mining,  mechanical,  chemical,  manufacturing,  smelt- 
ing, printing,  coal  oil  or  petroleum  or  agricultural  business,  and  for 
any  other  lawful  purpose  intended  for  pecuniar}'-  profit  or  gain  not 
otherwise  especially  provided  for.  § 1319. 


2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer  before  filing  articles 
of  incorporation:  $50  on  the  first  ”$50,000  or  less  of  capital  stock  and 
$5  for  every  additional  $10,000.  § 956;  Const.,  Art.  X,  § 21.  For  issu- 
ing certificate  of  corporate  existence,  $1.50.  Recording  fee  to  Secre- 
tary of  State,  10  cents  for  each  100  words  and  same  for  copies;  cer- 
tified copy,  $1.  § 3283.  To  Recorder  of  Deeds,  8 cents  per  100  words. 
§ 3256. 

* Sections  given  are  of  Revised  Statutes  of  Missouri  (1899). 


219 


220 


CLASSIFIED  CORPORATION  LAWS. 


Franchise  Tax.  Special  franchises  only  are  taxed.  L.  1901,  p. 

232. 

Local  Taxation.  Personal  property  is  returned  as  of  June  1st  of 
each  year  in  every  county  where  any  is  situated.  § 9152.  Individual 
stockholders  are  not  taxed  on  their  shares,  but  returns  are  made  by 
the  corporation  of  its  real  estate,  income  and  value  of  stock,  and 
surplus  value  above  real  estate  is  taxed  to  the  corporation.  § 9153. 

General.  On  increase  of  capital  stock,  $5  for  every  $10,000  or 
less  of  increase.  § 956;  Const.,  Art.  X,  § 21.  On  renewal  of  corporate 
existence,  same  fees  are  paid  as  on  original  incorporation.  § 972. 
For  all  other  certificates,  $1.25.  § 3283. 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 1312.  No  require- 
ments as  to  residence. 

Articles  of  Incorporation.  Of  manufacturing  and  business  cor- 
porations must  be  signed  and  acknowledged  by  all  the  incorporators 
(§  1313),  and  must  set  forth  (§  1312;  L.  1901,  p.  91): 

(1)  Corporate  name,  which  must  not  be  similar  to  that 
of  any  corporation  theretofore  incorporated  in  the  State  for 
similar  purposes.  If  the  name  assumed  is  that  of  a person 
or  firm,  some  word  designating  the  business  to  be  carried 
on  must  be  joined  thereto,  also  the  word  “corporation”  or 
“company.”  § 959. 

(2)  Name  of  city  or  town  and  county  in  which  it  is  to  be 
located. 

(3)  Amount  of  capital  stock,  number  of  shares  into  which 
it  is  divided  and  par  value  thereof.  Also  that  the  same  has 
been  subscribed  in  good  faith  and  that  one-half  has  actually 
been  paid  up  in  lawful  money  of  the  United  States  and  is 
in  the  custody  of  the  persons  named  as  the  first  board  of 
directors  or  managers. 

(4)  Names  and  residences  of  the  shareholders  and  num- 
ber of  shares  subscribed  for  by  each. 

(5)  Number  of  the  board  of  directors  or  managers  and 
the  names  of  those  agreed  on  for  the  first  year.  At  least 
three  must  be  residents  of  the  State  and  all  must  be  stock- 
holders. § 1022,  1320;  L.  1903,  p.  124. 

(6)  Number  of  years  the  corporation  is  to  continue,  not 
exceeding  fifty  years. 

(7)  Purposes  for  which  the  corporation  is  formed. 

(8)  If  any  portion  of  the  stock  is  to  be  preferred,  the 
amount,  the  number  of  shares  thereof,  the  names  of  sub- 
scribers therefor,  the  number  of  shares  subscribed  by  each 
and  the  preferences,  priorities,  classification  and  character  of 
such  stock.  § 1312;  L.  1901,  p.  91. 


MISSOURI. 


221 


Filing  and  Recording.  The  articles  of  incorporation  must  be  re- 
corded in  the  office  of  the  Recorder  of  Deeds  of  the  county  or  city  in 
which  the  corporation  is  to  be  located,  and  a certified  copy  is  filed  in 
the  office  of  the  Secretary  of  State  (§§  955,  1313),  who  thereupon  issues 
certificate  under  the  seal  of  the  State,  setting  forth  the  amount  of 
capital  stock,  the  period  of  existence  and  the  permanent  place  of  lo- 
cation. A certified  copy  of  this  certificate  is  then  recorded  with  the 
Recorder  of  Deeds  of  the  home  county.  §§955,  1314;  L.  1903,  p.  124. 
The  receipt  of  the  State  Treasurer  for  incorporation  fee  must  be  filed 
with  Secretary  of  State  before  he  will  issue  certificate. 

4.  Organization. 

First  Meetings.  Unless  otherwise  provided  in  the  articles,  the 
first  meeting  of  stockholders  for  adoption  of  by-laws  is  to  be  called 
by  notice  signed  by  one  or  more  of  the  incorporators,  served  per- 
sonally or  by  publication  in  a newspaper  in  or  nearest  to  the  county 
where  the  corporation  is  located,  at  least  seven  days  before  the  meet- 
ing- § 944-  It  must  be  held  within  the  State.  Camp  v.  Byrne,  41 
Mo.  525.  Officers  are  elected  at  the  meeting  of  directors  following 
the  first  meeting  of  the  incorporators.  § 954. 

By-Laws.  Are  to  be  adopted  by  the  incorporators  at  the  first 
meeting,  but  by-laws  to  direct  the  manner  of  taking  the  votes  of 
stockholders  on  the  question  of  increasing  or  diminishing  the  num- 
ber of  directors  or  trustees,  or  of  changing  the  corporate  name,  may 
be  made  by  the  directors  for  the  time  being.  No  by-law  regulating 
elections  of  directors  is  valid  unless  made  at  least  sixty  days  before 
the  election.  §§  969,  970. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  copy  of  the  articles  of  incorpora- 
tion with  Secretary  of  State,  after  payment  of  fees,  and  is  evidenced 
by  certificate  issued  by  him.  §§  955,  1314.  May  not  exceed  fifty  years. 
§ 1312.  Can  not  be  questioned  collaterally,  but  only  by  quo  warranto 
or  other  direct  proceeding  by  the  State.  Haskell  v.  Worthington, 
94  Mo.  560  (1887). 

Beginning  Business.  May  be  commenced  forthwith.  It  is  to  be 
noted,  however,  that  in  manufacturing  and  business  corporations  the 
articles  of  incorporation  must  show  that  all  of  the  capital  stock  has 
been  subscribed  and  that  one-half  is  actually  paid  in.  § 1312. 

Renewal.  Reorganization  under  the  old  name  is  provided  for  by 
majority  vote  of  the  stockholders  and  payment  of  the  same  fees  as 
on  original  incorporation.  §§  972,  1008. 

Forfeiture  of  Charter.  Is  to  be  decreed  by  court  on  proof  that  a 
corporation  has  violated  any  of  the  provisions  against  pools,  trusts 
and  conspiracies.  § 8971.  So  also  for  failure  to  maintain  office  in 
the  State  and  to  have  at  least  three  directors  residents  of  the  State, 
if  such  failure  lasts  for  a period  of  six  months.  § 1023. 


222 


CLASSIFIED  CORPORATION  LAWS. 


Dissolution.  On  insolvency,  may  be  had  on  action  by  the  direc- 
tors or  a majority  of  the  stock;  but  for  any  cause,  on  a vote  of  two- 
thirds  in  value  of  all  the  stock.  In  either  case  application  must  be 
made  to  the  courts.  §§  977-981.  Affidavit  of  dissolution  must  be  filed 
with  Secretary  of  State.  § 1018. 


6.  Corporate  Powers. 

General.  The  Constitution,  Art.  XII,  § 7,  provides  that  no  cor- 
poration may  engage  in  any  business  other  than  that  expressly  au- 
thorized in  its  charter.  But  manufacturing  and  business  companies 
may  extend  their  business  to  any  other  purposes  authorized  by  the 
law,  by  proceedings  similar  to  those  for  increase  of  stock.  §§  1327- 
1329.  General  powers  are  enumerated.  § 971;  L.  1903,  p.  114. 

To  Hold  Property.  This  power  is  granted  to  the  extent  of  cor- 
porate necessities  and  that  taken  to  pay  or  secure  debts.  § 971,  4. 
The  Constitution,  Art.  XII,  § 7,  provides  that  no  real  estate,  except 
such  as  may  be  necessary  or  proper  for  carrying  on  its  legitimate 
business,  may  be  held  by  any  corporation  for  a longer  period  than 
six  years. 

Its  Own  Stock.  The  power  of  a corporation  to  pur- 
chase its  own  stock  is  recognized  (Co.  v.  Co.,  168  Mo.  634  [1902]); 
but  it  is  provided  that  no  person  shall  be  admitted  to  vote  on  any 
share  of  stock  belonging  or  hypothecated  to  the  corporation.  § 950. 

Stock  of  Other  Corporations.  No  statutory  provisions. 

To  Borrow  Money.  Bonds  may  only  be  issued  for  real  value  and 
with  the  consent  of  a majority  in  value  of  the  stock  first  obtained  at  a 
meeting  called  for  that  purpose  on  sixty  days’  public  notice.  Const., 
Art.  XII,  § 8.  Bonded  indebtedness  must  not  exceed  the  authorized 
capital  stock,  except  in  the  case  of  railroad  companies  acquiring  the 
property  of  another  similar  company.  §§  962,  1337.  By  a two-thirds 
vote,  bondholders  may  be  authorized  to  convert  their  bonds  into  stock. 
§ 1337. 

To  Do  Business  in  Other  States.  No  direct  provisions,  but  all 
meetings  of  directors,  except  of  mining  and  railroad  companies,  must 
be  held  at  the  principal  office  within  the  State.  § 973;  L.  1901,  pp. 
88,  89;  Const.,  Art.  XII,  § 15. 

Consolidation  or  Merger.  Is  permitted  as  to  two  manufacturing 
corporations  whose  objects  and  business  are  in  general  of  the  same 
nature,  by  agreement  of  the  boards  of  directors  and  assent  of  the 
owners  of  at  least  three-fifths  of  the  capital  stock  of  each  corpora- 
tion; certificate  of  consolidation  to  be  recorded  and  filed  as  were 
original  articles  of  incorporation.  § 1334.  Consolidation  of  compet- 
ing or  parallel  lines  prohibited.  Const.,  Art.  XII,  § 17. 

Amendment  of  Charter.  No  general  statutory  provisions  exist, 
but  by  majority  vote  of  the  stockholders  the  corporate  name,  the 
number  and  par  value  of  shares,  and  the  number  of  directors,  within 
the  statutory  limits,  may  be  changed  (§  971,  7),  capital  stock  may  be 
increased  or  decreased  (§§  962,  I327-I333),  and  the  corporate  purposes 
may  be  extended.  § 1327.  All  amendments  are  made  and  filed,  re- 


MISSOURI. 


223 


corded  and  certified  in  the  same  manner  as  the  original  articles  and 
are  considered  as  part  of  the  original  articles.  §§  958,  1313;  L-  1903, 
p.  123. 


7.  Capital  Stock. 

Amount.  Of  manufacturing  and  business  corporations,  must  be 
not  less  than  $2,000  nor  more  than  $10,000,000.  § 1320. 

Initial  Payment.  In  manufacturing  and  business  corporations, 
the  entire  capital  stock  must  be  subscribed  for  and  one-half  paid  in 
before  the  articles  of  incorporation  are  filed.  § 1312.  As  to  corpora- 
tions generally,  it  is  provided  that  5 per  cent,  must  be  paid  in  cash 
on  each  subscription.  § 957. 

Consideration  for  Issue.  May  be  money  paid,  labor  done  or 
property  actually  received,  but  all  fictitious  issue  of  stock  is  void. 
§ 962;  Const.,  Art.  XII,  § 8;  Rumsey  Mfg.  Co.  v.  Kaime,  173  Mo. 
551  (1903);  Foster  v.  Refining  Co.,  118  Mo.  238  (1893).  No  note  or 
obligation  whether  secured  by  deed  of  trust,  mortgage  or  otherwise 
shall  be  considered  as  payment  of  any  part  of  the  capital  stock.  § 1323. 
Five  per  cent,  is  required  to  be  paid  in  money  on  each  subscription  at 
the  time  of  entering  the  same.  § 957. 

Assessments  are  regulated  by  by-laws.  For  non-payment,  stock 
may  be  forfeited,  on  sixty  days’  notice  served  personally  or  by  mail. 
§ 961.  Corporation  may  sue  for  arrears.  §§  984. 

Increase  or  Decrease.  May  be  effected  by  consent  of  the  per- 
sons holding  the  larger  amount  in  value  of  the  stock.  Procedure 
prescribed  in  detail.  §§  962,  963,  1328,  1329;  Const.,  Art.,  XII,  § 8.  On 

increase,  not  less  than  50  per  cent,  must  be  paid  up  in  lawful  money 

of  the  United  States.  § 1327.  Certificate  of  increase  is  filed  with 

Secretary  of  State.  § 964.  No  decrease  is  allowed  to  the  prejudice 

of  debts,  which  must  at  no  time  exceed  the  amount  of  the  capital 
stock.  § 1327. 

Classes  of  Stock.  May  be  provided  for  in  articles  of  incorpora- 
tion. § 1312.  Preferred  stock  may  also  be  issued  as  part  of  any 
increase  of  stock,  all  the  terms  on  which  such  preferred  stock  is  to 
be  issued  being  submitted  to  the  stockholders  at  the  meeting  held  to 
consider  such  increase.  Dividends  not  to  exceed  8 per  cent.  §§  1332, 
1333.  No  preferred  stock  shall,  however,  be  issued  without  the  con- 
sent of  all  the  stockholders.  Const.,  Art.  XII,  § 10. 

Par  Value  of  Shares.  Not  prescribed.  May  be  changed  by  ma- 
jority vote  of  the  stock  and  filing  affidavit  thereof.  § 971,  7. 

Stock  Certificates.  No  provisions. 

Transfer  of  Stock.  Must  be  made  on  the  books  of  the  corpora- 
tion. §§  965,  966.  No  transfers  to  be  made  until  all  previous  calls 
have  been  paid  in.  § 965. 


224 


CLASSIFIED  CORPORATION  LAWS. 


8.  Stockholders. 

Rights  and  Powers.  They  have  the  usual  powers  of  control  over 
charter  and  by-laws,  by  various  prescribed  proportions  of  the  stock. 
§§  962,  1328,  1 337,  1334.  Two  may  call  meetings  in  an  emergency  by 
application  to  justice  of  the  peace.  §§  945,  946. 

Liability.  Stockholders  are  liable  for  corporate  debts  to  the  ex- 
tent of  unpaid  subscriptions  on  stock.  This  liability  may  be  enforced 
only  after  execution  returned  unsatisfied  against  the  corporation, 
and  then  only  by  levying  such  execution  pursuant  to  order  of  court, 
obtained  on  regular  motion.  But  question  of  bona  fide  payment  for 
stock  may  be  enquired  into.  Shepard  v.  Drake,  61  Mo.  App.  134  (1894). 

Meetings.  The  time  and  place  within  the  State  shall  be  pre- 
scribed by  the  by-laws.  § 1320.  Unless  another  date  is  fixed  by  by- 
laws for  annual  election,  it  shall  be  held  on  the  second  Monday  of 
January.  § 968.  On  failure  to  hold  election  of  directors  on  the  day 
fixed,  an  election  must  be  called  within  sixty  days  thereafter,  those 
entitled  to  vote  thereat  to  remain  as  of  the  day  originally  fixed.  § 951. 
Every  meeting  of  shareholders  shall  be  convened  at  9 a.  m.  and  con- 
tinued three  hours,  unless  the  object  for  which  it  was  convened  be 
sooner  accomplished,  but  by-laws  may  change  this  for  meetings  for 
other  purposes  than  elections  or  special  propositions.  § 947. 

Notice.  For  ordinary  meetings  ten  days  is  prescribed,  unless 
longer  notice  is  required  by  statute;  such  notice  to  be  served  per- 
sonally, or  by  publication  for  ten  days  in  a daily  or  weekly  newspaper 
in  the  county  where  corporation  is  located.  § 947.  Notice  may  be 
waived  by  unanimous  written  consent.  State  v.  Cook,  178  Mo.  189 
(1903).  Two  weeks’  notice  by  publication  once  each  week  is  required 
for  annual  meeting  of  business  corporations.  § 1320. 

Voting.  No  one  shall  be  admitted  to  vote  except  those  in  whose 
names  the  shares  shall  have  stood  on  the  transfer  books  of  the  com- 
pany at  least  thirty  days  previous  to  the  election.  § 949.  It  must  be 
by  ballot.  § 1320.  Cumulative  voting  is  prescribed.  §§  953,  1320. 

Proxies.  Voting  by  proxies  is  permitted.  § 1320. 


9.  Directors. 

Number.  Must  be  not  less  than  three  nor  more  than  thirteen. 
§§  971,  1320.  Change  of  number  is  provided  for,  by  majority  vote  of 
the  stock.  § 971,  7.  Classification  is  permitted  up  to  three  classes, 
one  class  to  be  elected  each  year.  § 1320. 

Qualifications.  At  least  three  of  the  directors  must  at  all  times 
be  citizens  and  residents  of  the  State.  §§  973,  1022,  1320.  All  must 
be  stockholders.  § 1320;  L.  1903,  p.  124. 

Powers.  Within  certain  limits  they  may  make  by-laws.  § 969. 
(See  “By-Laws,”  under  § 4.)  They  fill  vacancies  on  the  board.  § 1320. 
They  are  trustees  on  dissolution.  § 976. 

Liability.  For  knowingly  declaring  and  paying  any  dividend 


MISSOURI. 


225 


when  the  company  is  insolvent  or  which  would  render  it  insolvent, 
they  are  jointly  and  severally  liable  for  all  corporate  debts  then  ex- 
isting or  incurred  while  they  remain  in  office.  Absent  directors  or 
those  entering  objections  on  record,  are  exempt.  §§  983,  1321. 

Meetings.  All  meetings  of  directors,  except  those  of  railroad 
and  mining  corporations,  must  be  held  at  the  general  office  within  the 
State.  § 973;  L.  1901,  p.  89;  Const.,  Art.  XII,  § 15.  A majority  is  re- 
quired to  constitute  a quorum.  § 973. 

Executive  Committee.  May  be  provided  for  in  by-laws.  § 954. 

10.  Officers. 

General.  The  directors  shall  appoint  one  of  their  number  presi- 
dent, and  shall  also  appoint  a treasurer  and  secretary  and  such  other 
officers  and  agents  as  the  by-laws  may  prescribe.  § 954.  Two  in- 
spectors of  election,  who  must  be  stockholders  and  not  directors,  are 
to  be  appointed  by  the  president  (§  947),  and  are  to  take  an  oath  in 
prescribed  form.  § 948.  Secretary  must  have  his  office  at  the  prin- 
cipal corporate  office  in  the  State.  § 1022. 

Liability.  There  are  penal  provisions  against  fraud  in  corporate 
affairs,  making  various  wrongful  acts  in  regard  to  issuance  of  stock 
or  bonds  felony,  punishable  by  fine  not  exceeding  $3,000  and  impris- 
onment not  less  than  three  nor  more  than  seven  years.  §§  1935,  1936. 
For  failure  to  file  tax  returns,  fines  of  $1,000  are  prescribed.  §§  9156, 
9231.  For  loans  to  stockholders  the  officers  assenting  to  same  become 
liable  to  the  corporation  for  the  amount.  § 1323.  For  refusal  to 
permit  examination  of  books,  they  are  liable  to  fines  of  $250  for  each 
offence.  § 967. 

11.  Principal  Office. 

A general  office  for  the  transaction  of  business  must  always  be 

maintained  in  the  State,  at  which  meetings  must  be  held  and  trans- 

fers of  stock  must  be  made.  § 1022;  Const.,  Art.  XII,  § 15.  Fac- 
tories, shops,  offices  or  agencies  or  other  establishment,  or  works  or 
business,  must  not  be  removed  from  any  city  or  place  without  first 
repaying  or  restoring  any  moneys,  lands  or  other  property,  granted 
to  the  corporation  as  an  inducement  to  locate  in  such  place.  § 1028. 

12.  Corporate  Books. 

What  Required.  Books  must  be  kept  in  which  shall  be  recorded 
the  amount  of  capital  stock  subscribed;  the  names  of  the  owners  of 

the  stock;  the  amounts  owned  by  them  respectively;  the  amount  of 

stock  paid  and  by  whom;  the  transfers  of  stock  with  dates;  amount 
of  assets  and  liabilities  and  the  names  and  places  of  residence  of  the 
officers.  § 966;  Const.,  Art.  XII,  § 15.  The  directors  of  manufac- 
turing and  business  corporations  are  charged  with  keeping  correct 
accounts  of  their  transactions.  § 1322.  Corporations  required  to  file 
annual  reports  are  charged  with  keeping  their  books  and  accounts 


226 


CLASSIFIED  CORPORATION  LAWS. 


in  such  manner  as  to  enable  them  accurately  to  make  such  reports. 

§ 1015. 

Where  Kept.  At  the  general  office  in  the  State.  §§  1022;  Const., 
Art.  XII,  § 15. 

Examination  of.  Stock  and  transfer  books  of  manufacturing 
and  business  corporations  must  be  open  to  parties  interested  at  all 
proper  times  under  such  regulations  as  may  be  prescribed  by  the  by- 
laws. § 1322.  Must  be  open  to  examination  of  stockholders  during 
usual  business  hours  for  thirty  days  previous  to  elections.  § 966. 
The  directors  must  also  mail  to  each  stockholder  at  least  ten  days 
before  election,  full  statement  of  the  corporate  condition  and  a list 
of  the  stockholders  with  the  number  of  shares  held  by  each.  § 1322. 
Transfer  books  must  be  produced  at  elections  to  determine  the  right 
to  vote.  §§  947,  949. 

13.  Reports. 

Every  business  corporation  must  annually  on  July  1st,  report  to 
the  Secretary  of  State,  the  location  of  its  principal  office;  name  of 
president  and  secretary;  amount  of  capital  stock,  both  subscribed  and 
paid  up;  par  value  of  stock  and  actual  value  at  time  of  making  report; 
cash  value  of  all  its  personal  property,  and  of  all  its  real  property 
within  the  State,  as  of  June  1st  next  preceding,  and  the  amount  of 
taxes  paid  for  the  last  year.  § 1013.  Affidavits  as  to  trusts,  in  form 
set  out  in  the  statute,  are  required  on  the  same  date.  § 8973.  The 
president  or  other  chief  officer  of  all  corporations  which  are  not 
specially  taxed,  must  deliver  to  the  assessor  a list  of  the  names  of 
persons  holding  stock  therein,  the  number  of  shares  held  and  the 
face  value  thereof;  also  a complete  statement  of  all  reserve  funds, 
undivided  profits,  premium  or  earnings  and  all  other  values  belong- 
ing to  the  corporation.  § 9153. 

Publication  is  required  only  of  notices.  §§  947,  963,  1328. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation  for 
gain  doing  business  in  the  State  must  file  in  the  office  of  the  Secre- 
tary of  State  a duly  authenticated  copy  of  its  charter  or  articles  of 
association,  together  with  a sworn  statement  under  the  corporate 
seal,  setting  forth  the  business  of  the  corporation  which  it  is  en- 
gaged in  carrying  on  or  which  it  proposes  to  carry  on  in  Missouri; 
and  its  principal  officer  or  agent  in  the  State  must  also  file  a duly 
verified  statement  of  the  proportion  of  its  capital  stock  represented 
by  property  located  and  business  transacted  in  the  State,  and  on  such 
proportion  of  its  capital,  incorporating  taxes  and  fees  are  paid  equal 
to  those  required  of  domestic  corporations.  §§  1025,  1315-1318.  Also 
$10  license  fee.  § 1317;  L.  1903,  p.  121. 

The  Secretary  of  State  issues  a certificate  of  authority  stating  the 
entire  amount  of  its  capital,  and  the  proportion  thereof  employed  in 
the  State  of  Missouri  (§  1025);  but  no  such  certificate  will  be  issued 
to  any  corporation  having  the  same  name  as  any  domestic  corpora- 
tion or  an  imitation  of  such  name  (Id.),  nor  will  license  be  issued  to 
any  foreign  corporation  that  could  not  organize  under  the  laws  of 


MISSOURI. 


227 


this  State  (§  1316),  nor  to  any  foreign  corporation  organized  by  resi- 
dents of  Missouri  to  avoid  the  laws  of  Missouri  (L.  1903,  p.  121),  and 
such  corporations  are  subject  to  the  limit  of  time  for  corporations  set 
out  in  the  laws  of  the  State.  § 1025.  They  are  subject  to  all  the  laws 
and  regulations  governing  domestic  corporations.  §§  1018,  1024. 

Penalties  for  Non-Compliance.  Fine  of  not  less  than  $1,000  is 
prescribed  and  inability  to  maintain  suits  in  the  courts  of  the  State. 
§ 1026. 

Taxation.  Same  as  for  domestic  corporations. 

Books.  An  office  must  be  maintained  in  the  State  at  which  books 
must  be  kept,  showing  in  detail  all  assets  and  liabilities  as  well  as  the 
names  and  residences  of  the  stockholders,  officers,  and  directors. 
§ 1024;  L.  1903,  p.  1 19;  State  v.  Dearing,  184  Mo.  647  (1904). 

Reports.  An  annual  report  on  July  1st  of  each  year  must  be 
made  to  Secretary  of  State,  giving:  (1)  Location  of  office;  (2)  name 
of  principal  officer  in  State;  (3)  cash  value  of  real  and  personal  prop- 
erty in  State  on  June  1st;  (4)  amount  of  taxes  paid  in  preceding 
year.  § 1014.  Also  an  affidavit  must  be  filed  on  or  about  July  1st  of 
each  year,  in  response  to  letter  of  inquiry  from  Secretary  of  State 
and  on  form  supplied  by  him  in  regard  to  pools,  trusts  and  conspir- 
acies, on  penalty  of  forfeiture  of  right  to  do  business  in  the  State, 
and  fines.  §§  8973,  8974. 

Attachments  Against.  Lie  against  foreign  corporations  as  non- 
residents. § 1007. 

15.  Combinations  and  Monopolies. 

Are  prohibited  broadly  under  penalties  of  forfeiture  of  charter 
or  right  to  do  business,  and  fine  of  from  $5  to  $100  for  each  day  of 
continued  violation.  §§  8965-8977.  Affidavit  is  to  be  filed  with  Sec- 
retary of  State  on  or  about  July  1st  of  each  year.  § 8973.  For  facili- 
tating the  enforcement  of  this  law,  minute  provisions  exist  concern- 
ing testimony  and  other  procedure.  §§  8978-8992;  State  v.  Armour 
Pkg.  Co.,  173  Mo.  356  (1903);  State  v.  Schwarzchild  & S.  Co.,  173  Mo. 
394  (1903);  Finck  v.  Granite  Co.,  187  Mo.  244  (1905). 


MONTANA. 


1.  Corporation  Laws.* 

Constitution.  (1889.)  No  charters  to  be  granted  by  special  act 
except  to  municipal,  charitable,  educational  or  reformatory  corpora- 
tions under  control  of  the  State.  Art.  XV,  § 2.  Cumulative  voting 
prescribed.  Id.,  § 4.  Trustees  may  not  invest  trust  funds  in  stock 
or  bonds  of  private  corporations.  Id.,  § 37.  Taxation  of  both  stock 
and  property  represented  by  such  stock  prohibited.  Art.  XII,  § 17. 
Trusts  prohibited.  Art.  XV,  § 20.  No  corporation  to  issue  stock  or 
bonds  except  for  labor  or  services,  money  or  property  actually  re- 
ceived; all  fictitious  issue  void.  Stock  not  to  be  increased  except  on 
majority  vote  of  the  stock  at  meeting  called  on  at  least  thirty  days’ 
notice.  Id.,  § 10.  Foreign  corporations  to  have  office  and  agent  in 
the  State,  and  not  to  enjoy  any  greater  privileges  than  accorded  to 
domestic  corporations.  Id.,  §11.  Consolidation  of  competing  lines 
prohibited.  Id.,  §§  6,  14. 

Statutes.  The  Civil  Code  (1895),  Division  First,  Part  IV,  con- 
tains the  corporation  laws  of  Montana.  Title  I contains  general  pro- 
visions under  which  corporations  for  all  ordinary  business  purposes 
may  be  formed.  Titles  II  to  XI  treat  respectively  of  banking,  trust 
and  savings,  insurance,  building  and  loan,  religious  and  benevolent, 
railroad,  telegraph  and  telephone,  and  mining  corporations.  Title  XII 
treats  of  foreign  corporations. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State  for  recording  and 
filing  articles  of  incorporation:  50  cents  on  each  $1,000  of  capital 
stock  up  to  $100,000;  40  cents  on  each  $1,000  of  excess  up  to  $250,000; 
30  cents  on  each  $1,000  above  $250,000  up  to  $500,000;  20  cents  on 
each  $1,000  above  $500,000  up  to  $1,000,000;  10  cents  on  each  $1,000 
above  $1,000,000.  Minimum  fee,  $20.  For  copies,  20  cents  per  folio; 
certificate  and  seal,  $1;  for  issuing  certificate  of  incorporation,  $3. 
L.  1905,  Ch.  74. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  As  for  individuals.  Taxation  of  both  stock  and 
the  property  represented  by  such  stock  prohibited.  Const.,  Art.  XII, 
§ 17.  Sworn  statement  of  property  to  be  made  to  tax  assessor  by 

* References,  except  where  otherwise  noted,  are  to  the  Civil  Code  of  1895. 

228 


MONTANA. 


229 


president,  secretary,  managing  agent  or  cashier  by  noon  on  first 
Monday  in  March.  Pol.  Code,  §§  3701,  3713. 

General.  Fee  for  filing  certificate  of  increase  of  capital  stock, 
same  as  on  original  incorporation;  for  filing  and  recording  certificate 
of  decrease  of  capital  stock,  $5;  for  filing  and  recording  certificate  of 
continuance  of  corporate  existence,  one-half  of  the  fees  paid  on 
original  incorporation,  and  for  issuing  certificate  of  filing  in  any  of 
the  foregoing  cases,  $3.  For  filing  and  recording  each  notice  of  re- 
moval of  place  of  business,  certificate  of  change  of  name,  or  making 
stock  assessable,  $3.  Any  other  paper,  $1.  For  all  copies,  20  cents 
per  folio;  certificates  and  seals,  $1.  L.  1905,  Ch.  74. 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 405.  But  religious 
corporations  may  be  formed  by  one  person.  L.  1899,  p.  105. 

Articles  of  Incorporation.  Must  be  subscribed  and  acknowledged 
by  each  of  the  incorporators  (§  405),  setting  forth: 

(1)  Name.  Must  not  be  similar  to  that  of  existing  cor- 
poration. 

(2)  Purpose  for  which  it  is  formed. 

(3)  Place  where  its  principal  business  is  to  be  transacted. 

(4)  Term,  not  exceeding  twenty  years.  § 406.  (See  § 5, 
“Corporate  Existence.”) 

(5)  Number  of  directors  or  trustees,  not  less  than  three 
nor  more  than  thirteen,  and  the  names  and  residences  of 
those  appointed  for  the  first  three  months  and  until  their  suc- 
cessors are  elected  and  qualified. 

(6)  Amount  of  capital  stock  and  the  number  of  shares 
into  which  it  is  divided,  and  if  there  be  more  than  one  class 
of  stock,  a description  of  the  different  classes  with  the  terms 
on  which  they  are  created.  § 520;  L.  1905,  Ch.  102. 

(7)  Amount  actually  subscribed  and  by  whom.  No  re- 
quirements as  to  amount. 

(8)  If  the  stock  is  assessable  it  must  be  so  stated.  § 403. 

Filing  and  Recording.  The  articles  of  incorporation  are  filed 
and  recorded  in  the  office  of  the  clerk  of  the  county  in  which  the 
principal  business  of  the  company  is  to  be  transacted,  and  a copy, 
certified  by  the  County  Clerk,  in  the  office  of  the  Secretary  of  State, 
who  thereupon  and  on  payment  of  the  prescribed  fees,  issues  a cer- 
tificate to  the  corporation  under  the  Great  Seal  of  the  State.  §§  406, 
41 1.  A copy  of  the  articles,  certified  by  the  Secretary  of  State,  must 
be  filed  in  the  clerk’s  office  of  every  county  in  which  the  corporation 
holds  property,  within  sixty  days  after  acquiring  same.  § 409. 


230 


CLASSIFIED  CORPORATION  LAWS. 


4.  Organization. 

First  Meetings.  By-laws  must  be  adopted  by  the  stockholders 
within  one  month  after  incorporation,  and  meeting  is  usually  called 
for  this  purpose  on  two  weeks’  notice  to  stockholders  published  in 
newspaper  in  county  nearest  to  principal  office.  § 430.  By-laws  may, 
however,  be  adopted  without  meeting,  on  written  assent  of  two-thirds 
stock.  Id. 

The  directors  must  meet  immediately  after  their  election  and 
organize  by  election  of  a.  president,  who  must  be  one  of  their  num- 
ber, a secretary  and  a treasurer.  § 437. 

By-Laws.  Where  no  other  special  provision  is  made,  the  by- 
laws may  provide  for:  (1)  Calling  and  conducting  meetings.  (2) 

Quorum  of  stockholders.  (3)  Voting  by  proxy.  (4)  Annual  election 
of  directors.  (5)  Compensation  and  duties  of  officers.  (6)  Manner 
of  election  and  tenure  of  all  officers  other  than  directors.  (7)  Suit- 
able penalties  for  violations  of  by-laws,  not  exceeding  $100  in  any 
one  case.  § 432. 

The  by-laws  must  be  certified  by  majority  of  the  directors  and 
by  the  secretary,  and  copied  in  a “Book  of  By-Laws.”  They  may  be 
repealed  or  amended  by  a two-thirds  vote  of  the  stock  at  any  meet- 
ing duly  called,  or  by  written  assent  of  a like  number;  and  the  power 
to  make  or  alter  by-laws  may  be  delegated  to  the  directors  by  a like 
vote  or  assent.  § 433. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  by  Secretary  of 
State.  § 406.  May  continue  for  twenty  years.  § 403.  Manufactur- 
ing, mining,  chemical  and  mechanical,  ditch,  flume  or  water  power, 
real  estate,  or  other  companies  designed  to  aid  and  develop  indus- 
trial and  productive  interests  may  incorporate  for  forty  years.  § 41 1. 
• Right  to  corporate  existence  can  not  be  attacked  collaterally.  §§  395, 
523- 

Beginning  Business.  May  be  begun  on  receipt  of  charter  from 
Secretary  of  State — must  be  within  one  year  thereafter  on  penalty 
of  forfeiture.  §§  406,  523. 

Renewal.  May  be  had  for  an  additional  term  of  twenty  years. 
§§  400,  413,  562. 

Forfeiture  of  Charter.  Quo  warranto  lies  against  corporation 
for  non-user  or  abuse  of  powers.  Code  Civil  Pro.,  §§  1410-35.  Failure 
to  commence  business  within  one  year  after  incorporation,  and  viola- 
tion of  law  against  combinations  and  monopolies,  are  grounds  for 
forfeiture  at  suit  of  Attorney  General.  § 523;  Const.,  Art.  XV,  § 20; 
Penal  Code,  § 321. 

Dissolution.  If  voluntary,  is  had  by  application  to  the  courts  on 
two-thirds  vote  of  all  the  stock.  Code  Civ.  Pro.,  §§  2191-2196.  Re- 


MONTANA. 


231 


ceiver  may  be  appointed  (Id.,  §§  950,  952),  and  if  no  receiver  or  other 
trustees  are  appointed  by  the  court,  directors  act  as  trustees.  § 561. 

6 Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 520. 

To  Hold  Property.  This  power  is  granted  to  the  extent  of  cor- 
porate necessity.  §§  520  (4),  526.  L.  1899,  p.  113,  contain  minute 
directions,  including  protection  of  minority  stockholders,  for  con- 
veyances of  all  or  part  of  property  of  mining  corporations. 

Its  Own  Stock.  On  sale  of  stock  for  non-payment  of 
assessments,  the  corporation  may  bid  it  in;  but  while  held,  it  is  non- 
assessable and  non-dividend  bearing  and  subject  to  the  control  of  the 
remaining  stockholders.  A majority  of  the  remaining  stock  is  a 
quorum.  §§  502,  503;  Porter  v.  Co.,  29  Mont.  347  (1904). 

Stock  of  Other  Corporations.  By  L.  1899,  p.  113,  min- 
ing corporations  are  by  implication  given  the  power  to  transfer  all  or 
any  part  of  their  property  in  exchange  for  property  or  stock  of  any 
other  corporation.  The  courts  have  held  that  “it  is  not  against  the  pub- 
lic policy  of  this  State  to  prevent,  and  mining  corporations  are  per- 
mitted to  hold  and  vote  stock  in  other  corporations  of  like  character.” 
McGinniss  v.  Mining  Co.,  29  Mont.  428  (1904). 

To  Borrow  Money.  This  power  is  granted  as  follows:  “To  enter 
into  any  obligations  or  contracts  essential  to  the  transaction  of  its 
ordinary  affairs,  or  for  the  purposes  of  the  corporation.”  § 520  (7). 
But  no  bonds  may  be  issued  except  for  money  paid,  labor  done  or 
property  actually  received,  and  all  fictitious  indebtedness  is  declared 
void.  § 525;  Const.,  Art.  XV,  § 10. 

To  Do  Business  in  Other  States.  Directors’  meetings  may  be 
held  without  the  State  if  authorized  by  the  by-laws.  L.  1899,  p.  108. 
The  courts  have  held  that  “It  is  also  true  that  the  directors  may 
transact  much  business  outside  of  the  State,  but  they  have  no  right 
to  move  the  entire  official  business  of  the  corporation  beyond  the 
State.”  McConnell  v.  Co.,  30  Mont.  239,  261  (1904). 

Consolidation  or  Merger.  Between  mining  corporations  is  pro- 
vided for  by  assent  of  two-thirds  of  the  stock.  § 527. 

Amendment  of  Charter.  Corporate  name  may  be  changed;  ex- 
istence extended  to  forty  years;  the  character  of  business  altered; 
the  capital  stock  increased  or  diminished  or  classified;  par  value  of 
shares  changed;  principal  place  of  business  changed,  as  also  number 
of  directors.  §§  400,  413,  450,  525. 

7.  Capital  Stock. 

Amount.  Not  prescribed  but  is  to  be  limited  in  articles  of  in- 
corporation. § 403. 

Initial  Payment.  Not  prescribed  but  amount  subscribed  is  to  be 
stated  in  articles  of  incorporation.  § 403. 


232 


CLASSIFIED  CORPORATION  LAWS. 


Consideration  for  Issue.  Must  be  money  paid,  labor  done  or 
property  actually  received,  and  all  fictitious  increase  of  stock  is  void. 
§ S25;  Const.,  Art.  XV,  § 10.  The  directors  may  purchase  mines, 
manufactories  and  other  property  necessary  for  the  corporate  busi- 
ness, and  issue  stock  therefor  to  the  value  thereof,  and  the  stock  so 
issued  shall  be  taken  and  declared  to  be  fully  paid  and  not  liable  to 
any  further  call.  On  mines  arbitrary  value  may  be  fixed.  But  in  all 
statements  and  reports  the  facts  of  payment  must  be  stated,  and 
such  stock  must  not  be  represented  as  having  been  paid  in  cash. 
§ 410.  On  overvaluation  of  property  taken  in  payment,  stockholder 
was  held  liable  for  difference.  Kelly  v.  Clark,  21  Mont.  291.  (See 
under  § 8,  “Liability.”) 

Minute  directions  are  given  for  levying  assessments',  where  ar- 
ticles of  incorporation  declare  the  stock  assessable.  §§  509,  490-508. 
Where  the  stock  has  been  declared  non-assessable  in  the  articles  of 
incorporation,  it  may  be  made  assessable  by  written  assent  of  three- 
fourths  of  the  stock  entered  on  the  records.  Certificate  to  be  filed 
and  recorded  in  the  same  offices  as  the  original  articles.  § 510;  see 
also  § 452. 

Increase  or  Decrease.  The  capital  stock  may  be  increased  or  de- 
creased by  two-thirds  vote  of  the  stock  cast  at  a meeting  called  in 
accordance  with  the  statute  (§§  412-414,  525),  but  must  not  be  de- 
creased to  an  amount  less  than  the  corporate  debts.  § 438.  Const., 
Art.  XV,  § 10,  prescribes  sixty  days’  notice. 

Classes  of  Stock.  May  be  provided  for  in  articles  of  incorpora- 
tion, with  terms  on  which  they  are  to  be  created. 

Preferred  stock  must  at  no  time  exceed  two-thirds  of  the  actual 
capital  paid  in  cash  or  property;  its  dividends  must  not  exceed  eight 
per  cent,  per  annum,  and  must  be  expressed  in  the  certificates.  It 
may  be  made  redeemable  at  not  less  than  par.  L.  1905,  Ch.  102. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Must  be  issued  when  fully  paid  for,  signed 
by  the  president  and  secretary.  By-laws  may  provide  for  issue  prior 
to  full  payment  under  suitable  restrictions.  § 471.  “Bearer  Certifi- 
cates” of  mining  companies  are  authorized  by  L.  1897,  p.  69.  Pre- 
ferred stock  certificates  must  show  amount  of  preferred  dividend. 
L.  1905,  Ch.  102. 

Transfer  of  Stock.  May  be  made  by  indorsement  and  delivery 
of  certificates,  but  is  not  valid  except  as  between  the  parties  until 
entered  on  the  books  of  the  corporation.  §§  472,  541.  “Bearer  Cer- 
tificates” of  mining  companies  may  be  converted  into  registered  cer- 
tificates at  any  time. 

8.  Stockholders. 

Rights  and  Powers.  They  have  control  of  all  charter  amend- 
ments, usually  by  a two-thirds  vote.  One-half  may  call  meetings  for 
the  removal  of  a director,  and  two-thirds  vote  will  remove  him.  § 439. 
The  same  number  may  call  meeting  and  vote  for  disposing  of  the 
whole  or  any  part  of  the  corporate  assets.  In  such  case  protection 


MONTANA. 


233 


for  minority  stockholders  is  provided.  L.  1905,  Ch.  103;  Forrester  v. 
Co.,  21  Mont.  544  (1899). 

Liability.  Stockholders  are  severally  and  individually  liable  to 
the  amount  of  unpaid  stock  held  by  them  respectively.  § 470.  They 
are  held  liable  in  a case  of  overvaluation  of  property  taken  in  payment 
for  stock.  Kelly  v.  Clark,  21  Mont.  291,  318;  King  v.  Mining  Co., 
28  Mont.  74  (1903). 

Meetings.  Must  be  held  annually  on  first  Tuesday  in  June,  un- 
less otherwise  prescribed  in  by-laws,  for  election  of  directors.  § 431. 

Place.  All  meetings  must  be  held  at  the  office  or  principal  place 
of  business  within  the  State.  §§  448,  450. 

Notice.  Must  be  published  two  weeks  in  a newspaper  in  the 
county  in  which  the  principal  place  of  business  is  located,  or  if  none 
there,  in  an  adjoining  county.  § 430.  Various  longer  notices  are 
specially  prescribed  for  meetings  for  amendments.  But  when  all  are 
present  and  sign  written  consent  to  any  meeting,  notice  is  not  re- 
quired. § 446. 

Quorum.  May  be  prescribed  by  by-laws  (§  432),  but  it  is  pro- 
vided that  a majority  of  the  stock  outside  of  treasury  stock  shall  con- 
trol (§  503),  and  a majority  of  the  subscribed  stock  is  also  prescribed 
for  all  other  meetings.  § 441. 

Voting.  Elections  must  be  by  ballot.  Voting  by  proxy  is  per- 
mitted, and  cumulative  voting  provided  for.  § 436.  Stock  can  not 
be  voted  which  has  been  transferred  within  ten  days  before  the  elec- 
tion. § 441. 

9.  Directors. 

Number.  Must  be  not  less  than  three  nor  more  than  thirteen. 
§§  403,  434,  450.  Number  may  be  changed  within  these  limits,  by  con- 
sent of  two-thirds  of  the  stock  and  publication  of  notice  for  three 
weeks.  § 450.  A director  may  be  removed  by  a like  vote,  and  one- 
half  of  the  stock  may  call  meeting  for  such  removal.  § 439. 

Qualifications.  Directors  must  be  stockholders  in  such  amount 
as  may  be  prescribed  by  the  by-laws.  This  does  not  apply  to  those 
named  in  the  articles  of  incorporation,  who  act  for  the  first  three 
months  and  until  their  successors  are  elected  and  qualified.  § 434. 

Powers.  Power  to  repeal  or  amend  by-laws  may  be  delegated 
to  directors  by  a two-thirds  vote  of  the  stock.  § 433.  They  fill  va- 
cancies on  the  board  unless  otherwise  provided  in  the  by-laws.  § 434. 
They  are  trustees  on  dissolution  or  expiration,  unless  court  appoints 
other  persons.  § 561.  Directors  can  not  vote  salaries  to  themselves, 
nor  adopt  by-laws  permitting  such  salaries.  McConnell  v.  Co.,  30 
Mont.  239;  Severson  v.  Co.,  18  Mont.  13. 

Liability.  For  failure  to  file  annual  report  the  directors  become 
jointly  and  severally  liable  for  existing  corporate  debts.  § 451.  For 
declaring  dividends  except  from  surplus  profits,  or  otherwise  reducing 
capital  stock  except  as  provided  by  law,  or  creating  debts  in  excess 
of  the  capital  stock,  the  directors,  except  those  absent  or  dissenting 
on  the  minutes  at  the  meeting,  are  jointly  and  severally  liable  to  the 


234 


CLASSIFIED  CORPORATION  LAWS. 


corporation  and  to  its  creditors  in  case  of  dissolution  to  the  full 
amount  of  such  dividend,  payment,  or  debt.  Statute  of  Limitations 
does  not  run  in  favor  of  directors  thus  liable.  § 438. 

Meetings.  Of  directors  may  be  held  either  within  or  without  the 
State  at  such  place  or  places  as  may  be  designated  by  the  by-laws. 
But  when  held  outside  of  the  State  either  the  original  or  full  and 
complete  copies  of  all  proceedings  had  at  such  meetings,  certified 
by  the  president  and  secretary  under  seal,  must  be  sent  to  and  kept 
at  the  principal  office  or  place  of  business  within  the  State  and  must 
be  part  of  the  corporate  records  in  the  State.  L,  1899,  P-  108;  McCon- 
nell v.  Co.,  30  Mont.  239,  263  (1904). 

In  the  absence  of  provisions  in  the  by-laws,  all  meetings  must 
be  called  by  special  notice  in  writing  given  each  director  by  the  secre- 
tary on  the  order  of  the  president,  or  if  none,  by  order  of  two  direc- 
tors. § 449.  A majority  constitutes  a quorum  (§  437)  and  is  essential 
to  valid  acts.  § 434. 

Executive  Committee.  No  statutory  provisions. 

10.  Officers. 

A president,  who  must  be  a director,  and  a secretary  and  treas- 
urer are  prescribed  (§  437);  their  duties  and  compensation  to  be  pre- 
scribed by  by-laws.  § 432.  For  wilfully  making  false  statements, 
representations  or  reports,  officers  are  jointly  and  severally  liable 
for  resulting  damages.  § 445. 

The  provisions  of  the  Penal  Code  relating  to  management  of 
corporations  are  numerous  and  minute.  §§  980-1000. 

11.  Principal  Office. 

Must  be  maintained  in  the  State.  Location  may  be  changed  by 
consent  of  two-thirds  of  the  stock  with  publication.  § 450. 

12.  Corporate  Books. 

What  Required.  A “Book  of  By-Laws”  is  prescribed  (§  433); 
also  a record  of  all  business  transactions,  a journal  of  all  meetings  of 
directors,  members  or  stockholders,  embracing  every  act  done  or 
ordered  to  be  done,  and,  if  a director  or  stockholder  so  requests,  the 
time  of  his  entering  or  departing  must  be  noted,  and  on  like  re- 
quest, the  ayes  and  noes  on  any  vote;  also  objections  must  be  entered 
in  full  if  requested.  § 540.  A “Stock  and  Transfer  Book”  is  also  pre- 
scribed with  full  details,  including  every  assessment,  paid  and  un- 
paid, etc.  § 541.  These  books  and  records  must  be  kept  at  the  gen- 
eral office  of  the  corporation  (§§433,  448),  and  are  to  be  open  to  in- 
spection of  the  public  (§  433),  or  to  stockholders,  members  and  credi- 
tors. §§  540,  541. 

13.  Reports. 

Every  stock  corporation  must  annually,  within  twenty  days  from 
December  31st,  file  in  the  office  of  the  clerk  of  the  county  in  which 


MONTANA. 


235 


the  principal  office  or  place  of  business  is  located,  a report  verified 
by  the  president,  vice-president  or  secretary  and  signed  by  the  presi- 
dent and  a majority  of  the  directors,  setting  forth:  The  amount  of 

the  capital  stock;  the  proportion  actually  paid  in;  the  amount  of 
existing  debts.  § 451;  L.  1903,  Ch.  32. 

Publication  is  required  of  numerous  notices  and  amendments, 
consolidation,  dissolution,  assessments,  etc.  Notice  of  stockholders’ 
meeting  can  alone  be  waived,  and  then  only  when  all  are  present  and 
sign  consent.  §§446,  450,  451,  495,  498,  525. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  before 
doing  business  within  the  State  must  file  in  the  office  of  the  Secre- 
tary of  State  and  of  the  clerk  of  the  county  in  which  they  intend  to 
carry  on  business,  duly  authenticated  copies  of  their  charters  or  ar- 
ticles of  incorporation,  and  a statement  verified  by  the  president 
and  secretary  and  attested  by  a majority  of  the  directors,  showing: 
(1)  Name  of  the  corporation  and  location  of  principal  office  or  place 
of  business  without  the  State  and  also  within  the  State.  (2)  Amount 
of  capital  stock.  (3)  Amount  of  capital  stock  actually  paid  in  in 
money.  (4)  Amount  of  capital  stock  paid  in  in  any  other  way  and  in 
what.  (5)  Amount  of  the  assets  of  the  corporation  and  of  what  they 
consist,  with  cash  value.  (6)  Liabilities,  and  what  amount  secured, 
if  any,  and  on  what  property.  Also  a certificate  under  the  corporate 
seal  and  verified  by  the  president  and  secretary  consenting  to  be  sued 
in  the  State  courts,  and  naming  an  agent,  who  must  be  a citizen  of 
the  State,  residing  at  the  principal  place  of  business  within  the  State, 
on  whom  service  may  be  made.  § 1;  L.  1901,  p.  150.  The  consent  of 
such  agent  must  also  be  filed.  Id.,  §2;  Const.,  Art.  XV,  § 11. 

Fees  on  filing  certified  copy  of  charter,  same  as  domestic  corpor- 
ations; notice  of  appointment  of  agent,  $5;  each  annual  report,  $5. 
L.  1905,  Ch.  74. 

Penalties  for  Non-Compliance.  Non-compliance  is  declared  a 
misdemeanor  of  the  corporation  and  its  agents,  and  renders  contract 
unenforceable.  L.  1901,  p.  150,  §§  3,  5,  6. 

Taxation.  The  franchise  of  a foreign  company  to  do  business  in 
the  State  is  property,  and  is  a proper  subject  for  taxation  within  the 
meaning  of  the  Constitution  (Art.  XII).  N.  W.  Mut.  L.  Ins.  Co.  v. 
Count}'-,  28  Mont.  484  (1903). 

Books.  No  express  statutory  regulations.  Foreign  corporations 
are  expressly  included  in  the  penal  provisions  as  to  books,  etc.  Penal 
Code,  §§  980-1000. 

Reports.  An  annual  report  must  be  filed  within  two  months  from 
April  1st  of  each  year,  in  the  same  form  and  containing  the  same  in- 
formation as  the  original  statement  and  filed  in  the  same  offices. 
L.  1901,  p.  150,  §4. 

Attachments  Against.  Are  issued  in  any  action  on  contracts  for 
the  direct  payment  of  money,  when  unsecured.  Code  Civ.  Pro.,  § 890. 


236  CLASSIFIED  CORPORATION  LAWS. 

(Montana) 

15.  Combinations  and  Monopolies. 

The  Constitution,  Art.  XV,  § 20,  prohibits  combinations  to  fix 
prices  or  regulate  the  production  of  any  articles  of  commerce  or  pro- 
duct of  the  soil  for  consumption  by  the  people.  This  is  carried  into 
effect  by  Penal  Code,  §§  321-325,  fixing  penalties  at  fines  not  exceed- 
ing $10,000  and  imprisonment  not  exceeding  five  years,  or  both,  and 
for  domestic  corporations,  forfeiture  of  all  property  and  franchises, 
and  for  foreign  corporations,  all  right  to  do  business  in  the  State. 
Labor  unions  excluded  from  these  provisions.  Id.,  §325;  McGinniss 
v.  Mining  Co.,  29  Mont.  428. 


NEBRASKA 


i.  Corporation  Laws.* 

Constitution.  (1875.)  No  local  or  special  laws  granting  any 
special  or  exclusive  privileges,  immunities  or  franchises  shall  be 
passed.  Art.  Ill,  § 15.  No  corporation  shall  be  created  for  business 
purposes  by  special  law.  Art.  XIII,  § 1.  Stockholders  are  liable  to 
extent  of  unpaid  subscriptions,  and  such  liability  follows  the  stock. 
Id.,  § 4.  Cumulative  voting  and  the  right  to  vote  by  proxy  are  pre- 
scribed. Id.,  § 5.  Foreign  corporations  are  prohibited  from  exercising 
the  right  of  eminent  domain.  Art.  XI,  § 8. 

Statutes.  The  general  corporation  law  of  Nebraska  is  contained 
in  the  Compiled  Statutes  of  1903,  Chapter  16.  Under  its  provisions 
corporations  may  be  formed  for  any  lawful  business.  Banks,  build- 
ing and  loan  associations,  safe  deposit  and  trust  companies,  railways, 
street  railways,  fidelity  and  guaranty  companies  are  subject  to  special 
regulations. 


2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State  on  filing  articles 
of  incorporation:  On  capitalization  not  exceeding  $100,000,  $10;  on 

each  $1,000  in  excess  of  $100,000,  10  cents  additional.  § 5905.  For  re- 
cording articles  of  incorporation,  10  cents  per  folio  of  100  words. 
Certified  copies,  15  cents  per  folio. 

To  County  Clerk:  Recording  fee,  75  cents  for  first  200  words  and 
1 cent  for  each  10  words  thereafter.  Copies,  10  cents  per  folio.  Cer- 
tificate with  seal,  25  cents.  § 3496.  Fee  includes  cost  of  one  dupli- 
cate. 29  Neb.  1 13. 

Cost  of  publication  of  notice  of  incorporation  in  newspaper  for 
four  weeks  is  also  incurred.  (See  “Certificates,”  under  § 4.) 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Capital  stock  and  franchise  to  be  listed  and 
taxed  where  principal  office  is  located,  or  if  the  corporation  has  no 
principal  office,  at  the  place  where  it  transacts  business.  § 4950. 

General.  Fee  for  filing  certificates  of  increase  of  capital  stock, 
$5  and  10  cents  for  each  $1,000  increase  over  original  capitalization; 

* References  are  to  the  Compiled  Statutes  of  Nebraska  (1903),  except  as  other- 
wise noted. 


237 


23B 


CLASSIFIED  CORPORATION  LAWS. 


for  filing  decreases  in  capital,  decree  changing  name,  or  other  amend- 
ments to  articles  of  incorporation,  $5.  Recording  fee,  10  cents  per 
folio.  § 5905. 


3.  Incorporation. 

Incorporators.  May  be  any  number.  No  residential  require- 
ments. § 2081. 

Articles  of  Incorporation.  Must  be  signed  and  acknowledged  by 
each  of  the  incorporators  and  should  set  forth  (§§  1971,  2088;  also 
charter  form  supplied  by  Secretary  of  State): 

(1)  Name.  No  restrictions. 

(2)  Location  of  principal  office.  Must  be  within  State. 

(3)  General  nature  of  business  to  be  transacted. 

(4)  Amount  of  capital  stock,  time  and  conditions  of  pay- 
ment and  amount  of  each  share.  Capitalization  may  be  for 
any  amount  and  in  shares  of  any  par  value. 

(5)  Time  of  commencement  and  termination  of  corpora- 
tion. Duration  may  be  perpetual. 

(6)  Highest  amount  of  indebtedness  which  may  be  car- 
ried, not  exceeding  two-thirds  of  the  par  value  of  the  capital 
stock.  § 2085;  Abbott  v.  Omaha  Smelting  Co.,  4 Neb.  421. 

(7)  Designation  of  officers  by  whom  business  is  to  be 
managed,  and  time  of  their  election.  The  board  of  directors 
should  be  specified  as  the  managing  body. 

(8)  Any  provisions  as  to  amendment  of  articles. 

Filing  and  Recording.  The  articles  of  incorporation  must  be 
filed  and  recorded  with  the  Secretary  of  State  and  with  the  clerk  of 
the  county  where  principal  office  is  located.  The  organization  and 
filing  fees  must  be  paid  before  the  charter  will  be  filed.  § 2102. 


4.  Organization. 

First  Meetings.  Stockholders’  meeting  for  the  purpose  of  adopt- 
ing by-laws  and  electing  directors  must  be  held  within  State  within 
one  year  after  incorporation.  § 2086.  No  provisions  as  to  first  meet- 
ing of  directors. 

By-Laws.  Corporation  may  adopt  by-laws  not  inconsistent  with 
law.  § 2082.  Copy  to  be  posted  in  conspicuous  place  in  offices  of 
corporation  open  to  public  inspection.  § 2092. 

Certificates.  Within  four  months  after  filing  articles  in  county 
clerk’s  office,  a notice  must  be  published  for  four  weeks  in  some  news- 
paper near  principal  place  of  business,  containing:  (1)  Name  of  the 


NEBRASKA. 


239 


corporation;  (2)  principal  place  of  business;  (3)  general  nature  of 
business;  (4)  amount  of  capital  stock  and  conditions  for  payment; 
(5)  time  for  commencing  and  terminating  business;  (6)  highest 
amount  of  indebtedness  which  may  be  incurred;  (7)  by  what  officers 
its  affairs  are  to  be  managed.  Not  necessary  to  wait  till  publication 
is  completed  before  beginning  business.  § 2089. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  articles  of  incorporation  and  pay- 
ing organization  tax.  § 2083.  May  be  perpetual.  § 2088. 

Beginning  Business.  May  be  commenced  as  soon  as  articles  have 
been  fully  filed  and  recorded  and  statutory  publication  of  organiza- 
tion has  begun.  § 2089.  Must  be  commenced  within  one  year  or 
charter  is  forfeited.  § 2086.  Articles  must  be  filed  with  clerk  of 
county  where  principal  office  is  located.  § 2084.  Manufacturing  cor- 
poration may  not  commence  business  until  10  per  cent,  of  stock  is 
subscribed.  § 1973. 

Renewal.  No  provision  except  for  companies  erecting  public  im- 
provements. §§  1991-2.  Original  articles  may  provide  for  perpetual 
existence.  § 2088. 

Forfeiture  of  Charter.  Corporate  powers  cease  on  failure  to  or- 
ganize within  one  year  after  incorporation.  § 2086.  Any  violation  of 
corporation  law  is  ground  for  forfeiture.  § 2100. 

Dissolution.  May  be  effected  with  consent  of  two-thirds  of  stock- 
holders, recorded  on  minutes.  § 2091.  Unless  other  persons  are  ap- 
pointed by  court  or  legislature,  directors  or  managers  act  as  trus- 
tees after  dissolution,  with  full  power  to  settle  affairs  subject  to  con- 
trol of  court  of  chancery.  §§  1996-2005.  Corporations  whose  char- 
ters expire  or  are  relinquished  continue  for  the  purpose  of  closing  up 
business.  § 2101. 


6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 2082. 

To  Hold  Property.  May  hold  such  personalty  or  real  estate  as 
is  necessary  to  its  legitimate  business.  § 2082. 

Its  Own  Stock.  No  statutory  provisions.  But  a cor- 
poration when  not  prohibited  by  its  articles  may  buy  and  sell  its 
own  stock  if  in  good  faith.  Fremont  Co.  v.  Thomsen,  65  Neb.  370. 

Stock  of  Other  Corporations.  Railroad  may  subscribe 
to  stock  of  another  road  to  facilitate  connections.  § 2028.  No  ex- 
press power  granted  to  corporations  in  general  to  hold  stock.  See 
Anti-Trust  Law,  L.  1905,  Ch.  162. 

To  Borrow  Money.  Indebtedness  may  not  exceed  two-thirds  of 
the  par  value  of  capital  stock.  § 2085.  Is  to  be  limited  in  articles  of 
incorporation.  Id. 


240 


CLASSIFIED  CORPORATION  LAWS. 


To  Do  Business  in  Other  States.  No  express  provision.  Power 
is  implied. 

Consolidation  or  Merger.  Consolidation  of  railroads  owning  com- 
peting lines  prohibited.  Const.,  Art.  XI,  § 3.  Connecting  railroads 
of  same  guage  may  consolidate.  § 2023.  Other  corporations  may 
merge  if  they  do  not  violate  anti-trust  act.  L.  1905,  Ch.  162. 

Amendment  of  Charter.  Amendment  may  be  provided  for  in  ar- 
ticles. Every  amendment  must  be  recorded  and  published  in  same 
manner  as  original  articles.  § 2090.  Without  special  provision  in  the 
articles,  the  corporate  name  may  be  changed  (§  5905),  capital  stock 
may  be  increased  or  decreased,  or  par  value  of  shares  changed,  by 
majority  action  of  the  stockholders.  § 1990. 

7.  Capital  Stock. 

Amount.  . No  limitations. 

Initial  Payment.  No  requirements.  Articles  of  incorporation 
should  provide  how  capital  is  to  be  paid  in.  § 2088.  Of  manufactur- 
ing companies,  10  per  cent,  must  be  subscribed.  § 1973. 

Consideration  for  Issue.  No  provision.  Subscriptions  of  manu- 
facturing companies  may  be  enforced  as  soon  as  10  per  cent,  of  the 
stock  has  been  subscribed.  § 1973;  Troup  v.  Horback,  53  Neb.  795; 
Penfield  v.  Co.,  57  Neb.  231. 

Increase  or  Decrease.  Capital  may  be  increased  or  decreased  by 
action  of  a majority  of  the  stockholders.  Directors  may  decrease 
stock  or  reduce  nominal  value  of  shares  upon  written  consent  of  ma- 
jority of  stockholders,  provided  creditors’  rights  are  not  impaired. 
§ 1990. 

Classes  of  Stock.  No  provision. 

Par  Value  of  Shares.  No  restrictions. 

Stock  Certificates.  No  statutory  provisions. 

Transfer  of  Stock.  By-laws  should  regulate  stock  transfers. 
§ 2082. 

8.  Stockholders. 

Rights  and  Powers.  Stockholders  make  by-laws  and  elect  direc- 
tors. Decrease  in  capital  stock  or  in  value  of  shares  must  be  au- 
thorized by  majority.  § 1990. 

Liability.  Original  stockholders  are  liable  to  creditors  to  amount 
of  unpaid  subscriptions;  liability  follows  stock  into  hands  of  subse- 
quent holders.  § 2093.  If  annual  notice  of  indebtedness  is  not  pub- 
lished or  there  is  defective  incorporation,  stockholders  are  liable  to 
amount  of  stock.  § 2096. 


NEBRASKA. 


241 


Meetings.  Articles  or  by-laws  may  designate  time  for  elections. 
§ 2088.  But  annual  meeting  of  manufacturing  corporations  must  be 
held  on  first  Monday  in  January.  § 1972.  On  failure  to  elect  officers 
at  annual  meeting,  special  election  may  be  held.  Manufacturing 
corporations  must  give  thirty  days’  notice  by  publication  of  special 
election.  Id.  Voting  by  proxy  and  cumulative  voting  is  prescribed. 
Const.,  Art.  XII,  § 5.  Other  details  of  meetings  are  to  be  provided 
for  by  by-laws.  But  a majority  of  all  the  shares  is  necessary  to  a 
valid  election  in  the  absence  of  some  rule  to  the  contrary.  Haskell 
v.  Read,  93  N.  W.  997. 

9.  Directors. 

General.  Directors  hold  office  until  their  successors  are  chosen, 
or,  prior  thereto,  in  manufacturing  corporation,  until  they  cease  to 
be  stockholders.  § 1972. 

Number.  Not  prescribed. 

Qualifications.  No  residential  requirements.  Directors  of  manu- 
facturing corporation  must  be  stockholders.  § 1972. 

Powers.  General  power  of  management  according  to  provisions 
of  by-laws.  Usual  powers  of  directors  of  manufacturing  corporations 
are  enumerated.  § 1972.  Directors  continue  as  trustees  after  dissolu- 
tion with  full  power  to  settle  corporate  affairs,  subject  to  control  of 
court  of  chancery.  §§  1996-2005. 

Liability.  Deception  as  to  assets  or  liabilities  or  illegal  decla- 
ration of  dividend,  subjects  those  responsible  to  fine  not  exceeding 
$500  and  double  damages.  §§  2098,  5260. 

Meetings.  No  statutory  provisions.  Should  be  provided  for  in 
by-laws. 

Executive  Committee.  May  be  provided  for  in  articles  of  in- 
corporation. 


10.  Officers. 

Articles  or  by-laws  may  designate  officers.  § 2088.  Directors  of 
manufacturing  corporation  to  choose  one  of  their  number  as  president 
and  elect  any  other  proper  officers.  § 1972. 

Officers  are  responsible  for  deception  as  to  assets  or  liabilities, 
aiid  are  liable  therefor  to  $500  fine  and  double  damages.  § 2098. 

n.  Principal  Office. 

Office  must  be  maintained  in  the  State.  § 2088. 

12.  Corporate  Books. 

Manufacturing  corporation  must  keep  stock  and  account  books 
at  principal  place  of  business  within  State,  which  must  be  open  to 


242 


CLASSIFIED  CORPORATION  LAWS. 


inspection  of  stockholders.  § 1972.  No  provisions  as  to  books  of 
other  corporations. 


13.  Reports. 

Annual  report  of  liabilities  signed  by  president  and  majority  of 
directors  must  be  published  in  newspaper  in  county  where  principal 
business  is  transacted.  § 2093.  Failure  so  to  do  renders  stockholders 
liable  for  corporate  debts  to  amount  of  stock. 

Statements  may  be  required  by  any  stockholder  of  the  condition 
and  amount  of  business. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  before 
doing  business  in  the  State  must  file  a true  copy  of  charter  with  Sec- 
retary of  State,  together  with  certified  copy  of  resolution  of  board 
of  directors  accepting  provisions  of  corporation  act.  § 2229.  Filing 
and  recording  fees  same  as  for  domestic  corporation. 

Also  from  and  after  June  30th,  1906,  they  must,  on  or  before 
September  15th  of  each  year,  file  a statement  in  office  of  Attorney 
General,  signed  and  sworn  to  by  the  president,  treasurer,  general 
manager  and  a majority  of  the  directors  of  the  corporation,  showing 
for  the  year  ending  June  30th:  (a)  Capital  stock;  (b)  market  value 

of  same;  (c)  payments  thereon  in  cash  and  in  other  values;  (d)  names 
of  officers,  managing  agents  and  directors;  (e)  amounts,  rates  and 
times  of  dividends;  (f)  number  and  par  value  of  stock  of  other  cor- 
porations held  directly  or  indirectly  by  it,  or  in  which  it  is  in  any 
way  interested;  also  amount  and  value  of  its  stock  held  by  other  cor- 
porations. L.  1905,  Ch.  162,  § 4. 

Also  they  must,  on  or  before  June  30th,  1906,  file  with  the  Attor- 
ney General  an  undertaking  signed  by  the  same  officials  that  they 
will  comply  with  the  provisions  of  the  laws  in  regard  to  corporations 
and  accepting  the  provisions  and  liabilities  of  the  act  as  long  as  they 
remain  in  office.  A similar  undertaking  must  thereafter  be  filed  within 
ten  days  of  the  election  of  officers  and  directors.  Id. 

Also  all  books  and  records  shall  be  subject  to  inspection  of  At- 
torney General  or  his  agents,  and  such  further  returns  must  be  made 
as  he  may  prescribe.  L.  1905,  Ch.  162,  § 5. 

Penalties  for  Non-Compliance.  Can  not  do  business  or  hold  real 
property  in  State.  §4825;  L.  1905,  Ch.  162,  §§10-13. 

Taxation.  Same  as  for  domestic  corporations. 

Books.  No  requirements  except  for  manufacturing  corporations, 
which  must  keep  same  books  as  domestic  corporations. 

Reports.  None  required  except  anti-trust  statements.  L.  1905, 
Ch.  162. 

Attachments  Against.  Same  as  against  non-residents.  §§  6741, 

6743. 


NEBRASKA. 


243 


15.  Combinations  and  Monopolies. 

Contracts,  combinations,  monopolies  or  conspiracies  in  restraint 
of  trade  or  monopolizing  any  part  of  the  trade  or  commerce  within 
the  State,  are  declared  illegal  and  the  persons  involved  guilty  of  a 
misdemeanor,  punishable  by  fine  not  exceeding  $5,000  or  by  imprison- 
ment not  exceeding  one  year,  or  both  (L.  1905,  Ch.  162,  § 12),  and 
property  owned  under  any  such  contract,  or  combination,  or  pursuant 
to  any  such  conspiracy  (and  being  the  subject  thereof)  shall  be  for- 
feited to  the  State.  Id.,  § 3. 

Non-resident  corporations  may  not  control  domestic  corporations. 
Id.,  § 7- 


NEVADA. 


1.  Corporation  Laws.* 

Constitution.  (1864.)  Corporations,  except  municipal,  not  to  be 
formed  by  special  laws.  Art.  VIII,  § 1.  Taxation  to  be  same  as  of 
persons.  Id.,  § 2.  Corporators  not  liable  for  debts  of  the  corporation. 
Id.,  §3.  State  ownership  or  interest  in  any  corporation  except  formed 
for  charitable  or  educational  purposes  forbidden.  Id.,  § 9.  County 
and  municipal  ownership  or  interest  forbidden  except  in  railroad  cor- 
porations. Id.,  § 10. 

Statutes.  The  general  corporation  law  is  found  in  Chapter  88 
of  the  Laws  of  1903,  as  amended  by  the  Laws  of  1905,  Chapter  51. 
Railroad,  telegraph  and  telephone  companies  are  subject  to  the  pro- 
visions of  §§  971-1077  of  the  Compiled  Laws  of  1900,  while  §§  897-901 
provide  for  foreign  corporations  (L.  1905,  Ch.  72),  and  §§902-968 
relate  to  insurance,  gas  and  surety  companies. 

Under  the  general  law  corporations  may  be  formed  for  any  law- 
ful business  or  object  except  banking,  insurance  and  surety  companies 
and  railroads  to  do  business  within  the  State.  §§  1,  8. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  For  articles  of 
incorporation,  10  cents  for  each  $1,000  of  authorized  capital  stock; 
minimum  fee,  $10.  § 102.  For  certifying  copy  of  articles  when  copy 

is  furnished,  $2.  For  filing  certificate  of  incorporation,  $5;  issuing 
certificates  under  seal,  $5;  for  recording,  40  cents  per  folio.  C.  L., 
§ 1938. 

Fees  to  County  Clerk  vary  from  15  to  25  cents  per  folio  for  filing, 
20  to  30  cents  for  recording,  and  50  cents  to  $1  for  certificates,  the 
smaller  fee  being  charged  in  counties  polling  over  800  votes.  C.  L., 
§§  2458,  2470. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Mines  and  mining  claims  are  exempt,  but  not 
proceeds  of  the  mines.  C.  L.,  §§  1081,  1147-1152.  Capital  stock  is  not 
assessed  to  the  owner  when  it  represents  property  which  is  taxed. 
Id.,  § 1089.  Returns  of  all  real  and  personal  property  are  made  to 
county  assessor  before  first  Monday  in  September.  Id.,  §§  1084-1086. 

* References,  when  not  otherwise  specified,  are  to  the  Laws  of  1903,  Chapter  88. 
“C.  L.”  refers  to  Compiled  Laws  of  1900. 


244 


NEVADA. 


245 


General.  To  Secretary  of  State:  On  increase  of  stock,  10  cents 
for  each  $1,000  of  total  authorized  increase;  minimum  fee,  $10;  on 
consolidation,  same  fees  on  all  excess  beyond  aggregate  stock  of 
constituent  companies;  on  extension  of  corporate  existence,  one- 
half  of  the  original  incorporation  fees;  for  certificates  of  dissolution 
or  any  amendments,  $10;  for  filing  list  of  directors  and  officers  and 
name  of  agent  in  charge  of  principal  office,  $1;  for  certifying  to  au- 
thorized printed  copy  of  general  corporation  law  as  compiled  by  the 
Secretary  of  State,  $2;  any  other  certificate,  $5.  § 102;  L.  1905,  Ch.  51. 

3.  Incorporation. 

Incorporators.  Must  be  not  less  than  three.  § 1.  They  are  not 
liable  for  corporate  debts.  Const.,  Art.  VIII,  §3. 

Articles  or  Certificate  of  Incorporation.  Must  be  signed  and  ac- 
knowledged by  all  of  the  incorporators  (§  3),  and  must  set  forth 
(§  4;  L.  1905,  Ch.  51): 

(1)  Name,  which  must  end  with  the  word  “incorporated” 
or  contain  the  word  “association,”  “company,”  “corporation,” 
“club,”  “society”  or  “syndicate.”  May  not  be  similar  to  that 
of  another  domestic  corporation  or  to  that  of  any  foreign 
corporation  engaged  in  the  same  business  in  the  State.  Must 
be  conspicuously  displayed  on  office,  stock  certificates,  etc., 
under  penalty  of  fine  and  forfeiture  of  charter.  § 16;  L.  1905, 
Ch.  51. 

(2)  Location  of  principal  office  or  place  of  business  in  the 
State,  giving  county,  city  or  town,  and  street  and  number,  if 
practicable,  or  describing  it  so  as  to  be  easily  located.  The 
Secretary  of  State  may  not  issue  a certificate  until  such  loca- 
tion is  marked  and  established. 

(3)  Nature  of  the  business  or  objects  for  which  it  is 
formed. 

(4)  Capital  stock,  to  be  not  less  than  $2,000;  the  number  of 
shares  and  the  par  value  of  each;  the  amount  of  subscribed 
stock  with  which  to  commence  business,  to  be  not  less  than 
$1,000;  the  amount  subscribed  and  the  amount  paid  up,  if 
any;  if  there  be  more  than  one  class  of  stock,  a description 
of  each  class  with  the  terms  on  which  it  is  to  be  issued,  the 
amount  subscribed  of  each  class  and  amount  paid  thereof. 
Shares  of  stock  may  be  of  any  desired  par  value. 

(5)  Name  of  each  of  the  original  subscribers  to  the  capital 
stock  and  amount  subscribed  by  each. 

(6)  Period,  if  any,  limited  for  its  existence.  May  be  per- 
petual. § 7. 

(7)  Number  of  the  governing  board,  which  shall  not  be 
less  than  three,  and  whether  its  members  shall  be  styled 
directors  or  trustees. 

(8)  Whether  or  not  full  paid  capital  stock  shall  be  sub- 
ject to  assessment  for  corporate  debts.  This  liability  can 


246 


CLASSIFIED  CORPORATION  LAWS. 


not  be  imposed  by  subsequent  amendment  but  must  be  in- 
serted in  original  articles,  if  desired. 

(9)  Any  provision  which  the  incorporators  choose  to  in- 
sert for  the  regulation  of  business  or  conduct  of  the  affairs 
of  the  corporation,  or  defining,  limiting  and  regulating  the 
powers  of  the  corporation,  its  directors  or  stockholders,  or 
classes  of  stockholders  or  bondholders,  or  governing  the 
distribution  of  profits  of  the  corporation.  § 4;  L.  1905,  Ch.  51. 

Filing  and  Recording.  The  articles  of  incorporation  are  filed  and 
recorded  in  the  office  of  the  clerk  of  the  county  in  which  the  prin- 
cipal place  of  business  is  intended  to  be  located,  and  a copy,  certified 
by  said  clerk  under  the  county  seal,  is  filed  in  the  office  of  the  Secre- 
tary of  State  (§  3),  who  thereupon,  if  the  proper  fees  have  been  paid, 
issues  a certificate  that  a copy  of  the  articles  containing  the  required 
statement  of  facts  has  been  filed  in  his  office.  § 5.  Certified  copies  of 
the  articles  must  also  be  filed  in  every  county  in  which  the  company 
holds  property  or  transacts  business  or  to  which  its  office  may  be 
removed.  §§  69,  70. 

4.  Organization. 

First  Meetings.  The  first  meeting  of  stockholders  may  be  held 
within  or  without  the  State,  on  notice  signed  by  a majority  of  the 
incorporators,  published  at  least  two  weeks  before  the  meeting  at 
least  three  times  in  a newspaper  of  the  county  where  principal  place 
of  business  is  located,  or  on  two  days’  notice  given  personally  to  all 
parties  named  in  the  articles  and  all  stockholders.  If  all  waive  notice 
in  writing  the  meeting  may  be  held  without  notice.  § 12.  At  this 
first  meeting  by-laws  are  adopted — unless  this  power  has  been  dele- 
gated to  the  directors  (§  21) — -and  directors  or  trustees  are  elected. 
§ 13.  Officers  are  elected  by  the  stockholders  or  the  directors  as  may 
be  prescribed  by  the  articles  or  by-laws. 

No  special  provisions  as  to  first  meetings  of  directors. 

By-Laws.  Are  to  be  made  by  stockholders  unless  this  power  has 
been  delegated  to  the  directors  by  the  original  or  amended  articles 
of  incorporation,  or  by  vote  or  written  assent  of  two-thirds  of  the 
stock.  § 21.  They  always  remain  subject  to  amendment  of  the  stock- 
holders by  a like  vote  or  consent.  Id.  The  by-laws  may  fix  the  num- 
ber of  directors  or  trustees,  provide  for  their  election,  removal  or 
change  of  number,  for  management  of  property,  regulation  and  gov- 
ernment of  its  affairs,  certification  and  transfer  of  stock,  and  may 
provide  suitable  penalties  for'  breach  thereof,  not  exceeding  $25  in 
any  one  case.  § 7.  The  by-laws  are  not  effective  until  copied  in  a 
“Book  of  By-Laws,”  which  must  be  kept  at  the  principal  office  for 
inspection.  § 21. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  of  incorporation 
by  Secretary  of  State.  § 5.  May  be  perpetual  unless  limited  in  the 


NEVADA. 


247 


articles  of  incorporation.  § 7.  Continues  one  year  after  expiration  or 
dissolution  for  the  purpose  of  closing  up  business,  and  this  period 
may  be  continued  two  years  longer  by  resolution  or  written  consent 
of  a majority  of  the  stockholders  filed  with  the  Secretary  of  State. 
§ 90.  It  can  not  be  attacked  collaterally.  § 52. 

Beginning  Business.  May  not  be  commenced  until  the  amount 
of  the  capital  stock  required  for  that  purpose  in  the  articles  of  incor- 
poration has  been  subscribed.  § 4.  This  amount  must  not  be  less 
than  $1,000.  Id.  Business  must  be  commenced  within  two  years 
after  incorporation.  § 51. 

Renewal.  At  any  time  before  the  expiration  of  the  period  limited 
for  its  existence,  a corporation  may  procure  a renewal  of  its  charter 
for  any  period.  Procedure  prescribed.  §§  107,  108. 

Forfeiture  of  Charter.  Occurs  on  failure  to  commence  business 
in  good  faith  within  two  years  after  incorporation.  § 51.  Failure 
for  ninety  days  to  maintain  office  in  State  in  charge  of  competent 
agent  or  to  keep  corporate  name  conspicuously  displayed  at  such 
office,  renders  charter  void.  § 16,  as  amended  by  L.  1905,  Ch.  51. 
Quo  warranto  may  be  brought  by  district  attorney  of  county  for  acts 
ultra  vires.  C.  L.,  § 3783. 

Dissolution.  Voluntary  dissolution  is  provided  for  by  consent  of 
two-thirds  in  interest  of  the  stock  or  each  class  of  stock  and  two- 
thirds  in  interest  of  creditors  entitled  to  vote;  or  by  written  consent 
of  nine-tenths  in  interest  of  each.  Certificate  of  proceedings,  giving 
names  and  residences  of  directors  and  officers,  verified  by  the  presi- 
dent, secretary  and  treasurer,  must  be  filed  with  the  Secretary  of 
State,  who  issues  certificate  of  dissolution.  § 89.  Involuntary  disso- 
lution and  receivership  are  provided  for.  §§  93-98. 


6.  Corporate  Powers. 

General.  Liberal  powers  are  enumerated.  § 7.  Banking  powers 
are  absolutely  denied  to  corporations  formed  under  the  general 
act.  § 8. 

To  Hold  Property.  May  be  held  without  limitation.  § 7. 

Its  Own  Stock.  This  is  expressly  permitted  in  case 
of  stock  sold  for  non-payment  of  assessments  and  for  which  no  other 
bidder  can  be  found.  Such  stock  is  held  at  the  disposal  of  the  re- 
maining stockholders  (§30),  but  may  not  in  any  way  be  voted.  §62. 

Stock  of  Other  Corporations.  This  power  is  fully  given. 

§§  101,  no. 

To  Borrow  Money.  This  power  is  fully  given.  § 7.  By  two- 
thirds  vote  of  stock,  bonds  may  be  issued,  and  board  of  directors 
may  make  them  convertible  into  common  stock.  §36.  Bondholders 
may  be  given  the  right  to  vote  and  to  inspect  books.  § n. 

To  Do  Business  in  Other  States.  This  is  fully  permitted,  even 
to  lines  of  activity  not  allowed  under  the  general  act  within  the 


248 


CLASSIFIED  CORPORATION  LAWS. 


State,  provided  such  corporations  do  not  thereby  violate  the  laws  of 
the  state  or  country  in  which  their  operations  are  to  be  conducted. 
§§  2,  7- 

Consolidation  or  Merger.  Is  permitted  without  restriction.  Re- 
quires assenting  vote  of  two-thirds  of  each  class  of  stock  or  voters. 
§§  43,  44.  Minority  stockholders  have  usual  rights.  §§  45,  46,  48. 

Amendment  of  Charter.  Corporation  may  change  its  name  or 
the  nature  of  its  business,  increase  or  decrease  its  capital  stock, 
change  the  par  value  of  shares,  change  the  location  of  its  principal 
office  in  the  State,  extend  its  corporate  existence,  change  the  number 
of  its  directors  or  trustees,  classify  stock,  and  make  such  other 
amendment  as  may  be  desired,  by  resolution  of  the  directors  ratified 
by  two-thirds  vote  of  each  class  of  stock  and  of  all  others  having 
voting  power,  at  a stockholders’  meeting  called  on  ten  days’  notice 
personally  or  by  mail.  Certificate  under  corporate  seal,  acknowl- 
edged by  the  president  and  secretary  and  written  assent  of  such 
voters,  must  be  filed  with  the  Secretary  of  State  and  certified  copy 
with  clerk  of  county  where  principal  office  is  located.  § 40.  Amend- 
ment may  not  be  had  to  extend  stockholders’  liability  beyond  unpaid 
subscriptions  on  their  stock.  § 4,  sub.  8. 

7.  Capital  Stock. 

Amount.  Is  to  be  stated  in  articles  of  incorporation.  Must  be 
at  least  $2,000.  § 4. 

Initial  Payment.  At  least  $1,000  must  be  actually  subscribed  be- 
fore business  can  be  commenced,  amount  to  be  stated  in  articles  of  in- 
corporation. § 4.  Actual  payment  thereof  is  not  prescribed  as  a 
prerequisite  to  beginning  business. 

Consideration  for  Issue.  Stock  may  be  issued  for  labor  done  or 
for  personal  property,  real  estate  or  leases  thereof;  and  in  the  absence 
of  fraud  in  the  transaction  the  judgment  of  the  directors  as  to  the 
value  is  conclusive.  § 54.  But  it  shall  be  the  duty  of  the  corporation 
to  have  its  minutes  or  other  permanent  records  show  with  reasonable 
detail  the  items  and  character  of  property,  labor  or  services,  for  which 
any  stock  or  bonds  were  issued.  § 55.  All  stock  so  sold  or  so  issued 
shall  be  fully  paid  and  not  liable  to  any  further  call  or  assessment, 
and  it  shall  so  be  stated  on  the  certificate.  § 55.  But  by  proper  pro- 
vision in  the  original  articles  of  incorporation,  full  paid  stock  may  be 
made  liable  for  corporate  debts.  § 4. 

Manner  of  payment  of  subscriptions  may  be  prescribed  in  by- 
laws. If  not  so  provided,  the  directors  may  demand  payment  at 
discretion.  Notice  of  assessment  must  be  given  personally  or  by 
publication  once  a week  for  four  weeks  in  a newspaper  in  the  county 
of  the  principal  office  and  in  the  county  where  the  corporate  property 
is  located  if  in  the  State,  and  if  no  such  newspapers,  then  in  newspa- 
per published  nearest  to  the  principal  place  of  business.  Sale  on  de- 
fault is  to  be  made  at  the  office  of  the  company  at  public  auction  after 
four  weeks’  similar  notice.  §§  28,  29. 


NEVADA. 


249 


Increase  or  Decrease.  Of  capital  stock  may  be  had  by  regular 
amendment  of  articles  of  incorporation.  § 40.  The  certificate  of 
decrease  must  be  published  at  least  once  a week  for  three  successive 
weeks  in  a newspaper  published  in  the  county  where  the  principal 
office  is  located,  the  first  publication  to  be  made  within  fifteen  days 
after  filing  the  same,  on  penalty  of  personal  liability.  § 42. 

Classes  of  Stock.  May  be  provided  for  in  articles  of  incorpora- 
tion (§§4,  40),  but  at  no  time  must  the  preferred  stock  exceed  two- 
thirds  of  the  capital  stock  paid  for  in  cash  or  property.  § 10.  Pre- 
ferred dividends  shall  not  exceed  10  per  cent,  per  annum  and  must  be 
cumulative.  § 10.  Preferred  stock  may  be  made  subject  to  redemp- 
tion at  not  less  than  par  at  any  time  after  three  years  from  the  date 
of  issue  (§  10),  and  if  it  has  received  dividends  exceeding  seven  per 
cent,  a year,  it  may  be  converted  into  ten-year  seven  per  cent, 
bonds.  § 36. 

Par  Value  of  Shares.  Not  prescribed,  but  must  be  stated  in  arti- 
cles of  incorporation.  § 4.  May  be  changed  by  regular  amendment. 
§40.  May  be  changed  without  changing  amount  of  stock,  by  majority 
vote  of  the  trustees.  §67. 

Stock  Certificates.  Must  be  issued  to  each  stockholder  under  the 
corporate  seal,  signed  by  the  president  or  vice-president,  and  by  the 
treasurer  or  secretary,  certifying  the  total  amount  of  capital  stock 
authorized,  the  total  number  of  shares,  their  par  value,  the  number 
of  shares  represented  by  the  certificate  and  whether  fully  paid  up  and 
non-assessable  or  not.  They  must  also  give  location  of  principal 
office  and  name  of  resident  agent.  § 56;  L.  1905,  Ch.  51. 

Transfer  of  Stock.  May  be  made  by  endorsement  and  delivery 
of  certificates,  but  is  not  valid  except  as  between  the  parties  until  it 
has  been  entered  on  the  books  of  the  corporation  with  surrender  and 
cancellation  of  old  certificate.  § 27. 


8.  Stockholders. 

Rights  and  Powers.  They  control  amendments,  consolidation 
and  dissolution  by  two-thirds  vote.  § 40.  Any  stockholder  may  com- 
pel meetings  on  application  to  court.  § 26.  They  may  remove  direc- 
tors by  two-thirds  vote  or  written  consent.  § 78.  On  petition  of 
stockholders  owning  a majority  of  the  stock,  officers  or  directors  may 
be  removed  in  court  on  certain  prescribed  procedure.  §§  79-82. 

Liability.  Is  limited  to  unpaid  subscriptions  unless  further  lia- 
bility is  imposed  by  original  articles  of  incorporation.  §4.  No  suit 
can  be  brought  to  enforce  this  liability  until  after  judgment  and 
execution  returned  unsatisfied  against  the  corporation.  § 31.  Liabili- 
ties created  by  statutes  of  other  states  can  not  be  enforced  against 
stockholders,  directors  or  officers  of  Nevada  corporations.  §33.  For 
non-compliance  with  law  in  respect  to  reduction  of  capital  stock, 
stockholders  are  liable  for  such  sums  as  they  receive  respectively  of 
the  amount  reduced.  § 42. 


250 


CLASSIFIED  CORPORATION  LAWS. 


Meetings.  Stockholders’  meetings  may  be  held  without  the  State 
if  the  by-laws  so  provide,  but  unless  so  provided,  they  must  be  held 
at  the  principal  office  in  the  State.  § 14.  Meetings  may  be  ordered 
by  court  on  petition  of  any  stockholder.  § 26. 

Notice.  May  be  prescribed  by  by-laws.  By-laws  may  provide 
for  waiver  of  notice  by  presence  of  all  the  stockholders  at  any  meet- 
ing or  by  written  consent  entered  on  the  minutes.  § ill. 

Quorum.  No  provisions.  May  be  prescribed  by  articles  or  by- 
laws. 

Voting.  Unless  otherwise  provided  in  the  articles  or  by-laws, 
every  stockholder  has  one  vote  for  each  share  of  stock;  but  no  stock 
may  be  voted  011  at  any  election  which  has  been  transferred  on  the 
books  of  the  company  within  twenty  days  before  such  election.  § 58. 
Fractions  of  shares  can  not  be  voted.  § 17.  All  elections  shall  be  by 
ballot  unless  otherwise  provided  by  the  articles  or  by-laws.  § 18. 
Cumulative  voting  is  directed  unless  otherwise  prescribed  in  certifi- 
cate of  incorporation.  § 20.  Bondholders  and  secured  creditors  may 
be  allowed  to  vote  by  provision  of  articles  of  incorporation.  §11. 

Proxies.  Or  powers  of  attorney,  must  be  in  writing  and  filed 
with  the  secretary.  §§  17,  ill. 


9.  Directors. 

Number.  Must  not  be  less  than  three.  §4.  Otherwise  it  may 
be  fixed  or  altered  by  the  by-laws.  § 7.  It  is  originally  stated  in 
articles  of  incorporation.  § 4. 

Qualifications.  They  must  take  and  subscribe  an  oath  as  pre- 
scribed by  the  laws  of  the  State  to  perform  their  duties  faithfully  and 
observe  and  maintain  the  respect  due  said  laws.  § 19.  If  a majority 
of  the  directors  fail  to  qualify  after  election,  a new  meeting  of  the 
stockholders  may  be  called  by  one-third  thereof  to  fill  vacancies.  If 
a majority  of  the  directors  have  qualified,  they  may  fill  the  vacancies 
caused  by  a minority  failing  to  qualify.  § 24. 

Powers.  The  making  and  amending  of  by-laws  may  be  delegated 
to  them  in  the  articles,  or  by  two-thirds  of  the  stock  assenting  by 
vote  or  in  writing.  § 21.  They  continue  as  trustees  on  dissolution 
or  expiration.  § 91. 

Liability.  For  failure  to  publish  certificate  of  any  decrease  of 
capital  stock  as  prescribed,  the  directors  are  liable  for  corporate  debts 
contracted  before  filing  the  same.  § 42.  For  making  dividends  except 
from  net  profits,  or  reducing  capital  stock  except  as  provided  by  law, 
the  directors,  unless  dissenting  on  the  minutes,  are  jointly  and  sever- 
ally liable  to  the  corporation  and  its  creditors  to  the  extent  of  such 
payment.  § 68. 

Meetings.  May  be  held  within  or  without  the  State,  on  notice 
to  be  prescribed  by  by-laws.  The  by-laws  may  also  provide  that  any 
action  by  majority  without  regularly  called  meeting  shall  be  valid 
when  such  act  is  afterwards  assented  to  in  writing  by  all  the  other 
members  of  the  board.  §23.  Waiver  of  notice  is  provided  for  and 
may  be  made  orally  and  entered  on  the  minutes.  § ill.  A majority 


NEVADA. 


251 


is  required  for  a quorum.  § 23.  Vacancies  among  the  directors  may 
be  filled  by  board  unless  by-laws  provide  otherwise.  § 25. 

Executive  Committee.  Is  provided  for  with  full  powers.  §23. 

10.  Officers. 

General.  A president,  secretary  and  treasurer  are  prescribed,  to 
be  elected  by  the  directors  or  stockholders,  as  the  by-laws  direct. 
The  president  must  be  a director,  and  the  secretary  must  be  sworn 
and  is  charged  with  recording  the  acts  and  votes  of  the  corporation, 
its  stockholders  and  directors,  etc.  The  treasurer  must  give  bond  as 
required  by  by-laws.  § 22. 

The  corporate  agent  within  the  State  may  be  a bank  or  other 
corporation,  and  shall  have  authority:  (1)  To  act  as  fiscal  or  transfer 
agent  in  the  State  and  as  such  to  receive  and  disburse  money.  (2) 
To  transfer,  register  and  countersign  certificates  of  stock,  bonds,  etc. 
(3)  To  act  as  trustee  under  mortgage,  etc.  (4)  To  receive  and  man- 
age any  sinking  fund,  etc.  § 15. 

Liability.  For  making  false  statements,  entries,  accounts,  etc., 
any  officer  or  director  is  guilty  of  a misdemeanor  and  is  liable  for 
damages  and  fines.  §§  73-77.  (See  under  § 9,  “ Liability.”) 

11.  Principal  Office. 

Must  be  maintained  in  the  State  with  a resident  agent  in  charge. 
Stockholders’  meetings  must  be  held  therein  unless  otherwise  pro- 
vided by  the  by-laws.  § 14.  The  place  for  holding  annual  meetings 
must  not  be  changed  within  sixty  days  next  before  such  meeting, 
and  thirty  days’  notice,  personally  or  by  mail,  must  be  given  each 
stockholder.  § 13. 

The  corporate  name  must  be  conspicuously  painted  or  printed  on 
its  principal  office  and  on  its  principal  place  or  places  of  business,  on 
penalty  of  fine  of  not  less  than  $100  nor  more  than  $500.  § 16;  L. 

1905,  Ch.  51. 

* 

12.  Corporate  Books. 

What  Required.  A stock  ledger  is  prescribed.  §§  14,  71.  Also  a 
book  of  by-laws.  § 21.  The  stock  transfer  book  must  show  the 
names  of  the  parties  by  and  to  whom  transferred,  number  or-  designa- 
tion of  shares  and  date  of  transfer.  § 27.  A list  of  stockholders  must 
be  prepared  at  least  ten  days  before  elections  for  examination  of 
stockholders.  § 58. 

Where  Kept.  The  original  or  duplicate  stock  ledger,  and  a copy 
of  the  articles  of  incorporation,  of  all  amendments  thereof,  and  copy 
of  all  by-laws  must  be  kept  by  the  corporate  agent  at  the  principal 
office  in  the  State.  §§  14,  22,  58,  71. 

Examination  of.  The  stock  ledger,  incorporation  papers  and  by- 
laws are  for  the  use  and  examination  of  parties  interested  and  entitled 
thereto.  §§  14,  58.  Stock  ledger  to  be  open  for  inspection  of  stock- 


252 


CLASSIFIED  CORPORATION  LAWS. 


holders  and  voting  creditors  during  business  hours,  and  they  may 
demand  sworn  copies  on  payment  of  expenses.  § 71.  Information 
to  be  furnished  to  creditors  of  stockholders  on  affidavit  to  the  fact 
that  they  are  such  creditors.  § 72. 


13.  Reports. 

Any  election,  removal  of  directors,  or  other  change  in  the  board 
of  directors  must  be  reported  to  the  Secretary  of  State  by  statement 
signed  and  verified  by  the  president  and  secretary,  giving  names  of 
all  the  directors  or  trustees  and  officers  with  date  of  appointment; 
term  of  office;  residence  and  post-office  address  of  each;  character 
of  business  of  each;  exact  location  of  principal  office  in  State,  and 
name  of  resident  agent  in  charge  thereof  and  on  whom  process  may 
be  served.  On  failure  to  file  certificate  for  thirty  days,  corporation 
forfeits  $100  to  the  State.  §85;  L.  1905,  Ch.  51. 

Mining  corporations  are  taxed  on  the  product  of  the  mines  and 
must  furnish  special  statements  to  assessor.  C.  L.,  § 1150. 

Publication  is  required  of  various  notices,  but  it  is  expressly 
provided  that  all  notices  may  be  waived.  § 111.  Certificate  of  de- 
crease of  capital  stock  is  to  be  published  three  weeks.  §42.  Notices 
of  assessments  on  stock  and  of  sale  on  default  are  to  be  published 
four  weeks.  §§  28,  29. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation 
must  file  a duly  authenticated  copy  of  its  certificate  of  incorporation 
in  the  county  recorder’s  office  of  every  county  in  which  it  is  carrying 
on  business,  together  with  a duly  certified  list  of  its  officers.  C.  L., 
§ 897.  Such  corporation,  owning  property  or  doing  business  in  the 
State,  must  also  appoint  an  agent  on  whom  process  may  be  served, 
and  file  a duly  authenticated  certificate  by  the  proper  corporate  offi- 
cers with  the  Secretary  of  State,  specifying  full  name  and  residence 
of  such  agent.  Id.,  §899.  Fees  for  filing  copy  of  charter  and  state- 
ment and  issuing  certificate  of  authority  to  transact  business,  $10. 
§ 102.  Appointment  of  agent,  $5.  C.  L.,  § 1938. 

Penalties  for  Non-Compliance.  Agents  or  officers  are  guilty  of 
misdemeanor,  punishable  by  fine  of  from  $50  to  $500  and  imprison- 
ment not  to  exceed  six  months.  C.  L.,  § 898.  On  failure  to  appoint 
agent,  or  file  certificate  of  such  appointment  for  fifteen  days,  process 
against  such  foreign  corporation  may  be  served  on  Secretary  of  State 
or  his  deputy.  Id.,  §901;  L.  1905,  Ch.  72. 

Taxation.  A retaliatory  provision  exists  for  taxation  of  foreign 
corporations,  in  addition  to  any  other  taxes  imposed.  § 106. 

Books.  No  specific  statutory  requirements. 

Reports.  Same  certificates  of  directors,  officers,  principal  office 
and  agent  is  required  as  of  domestic  corporations.  §85.  Fee,  $1. 
§ 102.  All  foreign  corporations  doing  business  in  the  State  of  Nevada 
must  publish  a statement  of  the  business  of  the  preceding  year  for 


NEVADA. 


253 


one  week  in  January  of  each  year  in  a daily  newspaper  of 
and  a copy  is  to  be  filed  by  the  secretary  with  the  several 
of  the  State,  on  penalty  of  fine  of  $100  for  each  month  of 
default.  L.  1901,  Ch.  108. 

Attachments  Against.  No  special  provisions. 


the  State, 
assessors 
continued 


15.  Combinations  and  Monopolies. 

Are  not  provided  against  by  law. 


NEW  HAMPSHIRE. 


1.  Corporation  Laws,* 

Constitution.  (1784,  as  amended  to  1905.)  No  town  shall  be 
authorized  to  loan  its  credit,  directly  or  indirectly,  to  a corporation 
for  profit,  nor  to  aid  the  same  by  taking  its  stock  or  bonds.  Part. 
II,  Art.  5- 

Statutes.  The  general  corporation  law  is  found  in  the  Public 
Statutes  of  1900,  Title  20,  Chapters  147  to  151  inclusive,  with  amend- 
ments of  L.  1901,  Chs.  9,  66,  68  and  L.  1905,  Chs.  61,  70,  111.  Title  21 
treats  of  railroads;  Title  22  of  banks;  Title  23  of  insurance,  and  Title 
10  of  highways,  bridges,  sewers,  ferries,  and  telegraph  and  telephone 
and  electric  light  companies.  The  banking  law  provides  for  trust, 
savings  and  building  and  loan  associations,  etc. 

Under  the  general  law  corporations  may  be  formed  for  any  lawful 
purpose  except  banking,  insurance  and  railroads  (Ch.  147,  § 1),  or 
trading  stamp  companies.  L.  1905,  Ch.  70.  Corporations  are  also 
chartered  by  special  act  of  legislature. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer  on  recording  arti- 
cles of  association:  $50  if  the  corporation  is  to  carry  on  its  business 
or  have  its  principal  office  within  the  State.  Ch.  14,  § 5.  Corporations 
for  profit,  to  carry  on  their  business  and  have  principal  offices  with- 
out the  State,  pay  on  capital  stock  not  exceeding  $25,000,  $10;  over 
$25,000  and  not  exceeding  $100,000,  $25;  over  $100,000  and  not  exceed- 
ing $500,000,  $50;  over  $500,000  and  not  exceeding  $1,000,000,  $100; 
when  it  exceeds  $1,000,000,  $200.  Ch.  14,  §§  6,  8. 

To  Secretary  of  State,  for  recording,  75  cents  per  page  of  240 
words;  for  certificate  and  seal,  50  cents.  To  Town  Clerk  for  record- 
ing, 17  cents  per  page  of  224  words.  Ch.  287,  §§  26,  29. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Stock  is  not  taxed  when  the  property  it  repre- 
sents is  taxed,  either  in  this  or  in  other  States.  Ch.  55,  §§7-10. 

General.  On  renewal  of  corporate  existence  or  on  increase  o£ 
capital  stock,  same  fees  are  paid  as  on  original  incorporation,  the  fees 
in  the  latter  case  being  on  the  increase  of  stock.  For  amendments, 
$25.  Ch.  14,  §§  5,  6. 


References  are  to  Public  Statutes  of  1900,  except  as  otherwise  noted. 

254 


NEW  HAMPSHIRE. 


255 


3.  Incorporation. 

Incorporators.  Must  be  five  or  more  persons  of  lawful  age. 
Ch.  147,  § 1.  For  any  fraud  or  illegality  in  incorporation  they  are 
liable  as  partners.  Ch.  14,  § 9. 

Articles  of  Association.  Must  be  signed  and  acknowledged  by 
the  incorporators,  and  must  set  forth  (Ch.  147,  § 2) : 

(1)  Name  of  the  corporation.  Must  be  one  which  is  not 
in  use  in  the  State  by  another  corporation.  Ch.  147,  § 3. 
May  be  changed  by  amendment.  Id.,  §4. 

(2)  Object  for  which  it  is  established. 

(3)  Place  in  which  business  is  to  be  carried  on. 

(4)  Amount  of  its  capital  stock  and  amount  to  be  paid  in. 

Amount  of  capital  stock  must  not  be  less  than  $1,000  nor 
more  than  $1,000,000.  Ch.  147,  § 6. 

(5)  Time  of  first  meeting  of  incorporators.  Ch.  148,  § 4. 

(6)  Signatures  and  post-office  addresses  of  the  incorpora- 
tors. 

Filing  and  Recording.  The  articles  of  association  must  be  re- 
corded in  the  office  of  the  clerk  of  the  town  in  which  the  business  is 

to  be  carried  on  and  in  the  office  of  the  Secretary  of  State.  Ch. 

147,  §4- 


4.  Organization. 

First  Meetings.  Of  stockholders  may  be  called  by  any  three 
incorporators  by  seven  days’  notice  personally  or  by  mail.  Notice 
may  be  waived  if  all  are  present  or  have  agreed  in  writing  on  time 
and  place.  Ch.  148,  § 4.  A temporary  clerk  must  be  chosen  and 
sworn.  Id.,  § 5.  A president  may  be  chosen  by  the  incorporators. 
Ch.  149,  § 4. 

By-Laws.  May  be  adopted  at  first  meeting.  Ch.  148,  § 5.  They 
may  provide  for  election,  removal,  and  retiring  of  members;  fix  times 
and  places  of  holding  meetings  and  manner  of  calling  and  conducting 
them;  regulate  the  number  of  officers,  manner  of  election,  tenure  of 
office  and  their  powers  and  duties.  Ch.  148,  § 6.  As  to  by-laws  gov- 
erning assessments  on  capital  stock,  see  Ass’n  v.  Borrowe,  71  N.  H. 

69  (1903)- 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  recording  of  articles  and  payment  of 
fees  (Ch.  147,  §4),  and  is  perpetual  unless  limited  by  charter.  Ch. 
148,  § 3.  Continues  three  years  after  expiration,  annulment  or  disso- 


CLASSIFIED  CORPORATION  LAWS. 


256 

lution  to  wind  up  affairs.  Ch.  148,  § 18.  State  alone  can  enforce  a 
forfeiture,  and  the  question  can  not  be  raised  collaterally.  S.  F. 
Bridge  v.  Fisk  & Norcross,  23  N.  H.  171  (1854). 

Beginning  Business.  May  be  commenced  forthwith  and  must  be 
commenced  within  three  years.  Ch.  149,  § 2. 

Renewal.  No  statutory  provisions,  the  law  contemplating  per- 
petual existence.  It  may  be  effected  by  re-incorporation.  Ch.  14,  § 5. 

Forfeiture  of  Charter.  Occurs  if  organization  is  not  effected 
within  three  years  from  date  of  incorporation.  Ch.  149,  § 2.  For 
falsely  pretending  to  carry  on  business  in  the  State  or  have  a prin- 
cipal office  there  to  avoid  payment  of  charter  fees,  the  incorporation 
is  declared  void.  Ch.  14,  §§  8-10. 

Dissolution.  One-fourth  of  the  stock  may  apply  to  the  Supreme 
Court  for  dissolution.  Ch.  148,  §22;  Ch.  147,  §10.  An  attested  copy 
of  the  decree  of  dissolution  is  filed  with  the  Secretary  of  State. 
Records  of  the  dissolved  corporation  must  be  lodged  with  the  Secre- 
tary of  State  within  thirty  days  after  its  affairs  are  closed  up.  Ch. 
147,  §§  11,  12. 

6.  Corporate  Powers. 

General.  General  powers  are  enumerated.  Ch.  148,  § 3. 

To  Hold  Property.  The  property  that  may  be  held  is  limited 
to  that  necessary  for  the  authorized  corporate  operations,  not  to 
exceed  the  amount  limited  by  charter  or  statute.  Any  property  in 
excess  of  this  taken  in  payment  of  debts  must  be  sold  within  five 
3"ears  after  title  thereto  is  perfected.  Ch.  148,  §§  8,  9. 

Its  Own  Stock.  No  provisions. 

Stock  of  Other  Corporations.  No  provisions  or  deci- 
sions. 

To  Borrow  Money.  Corporate  debts  or  liabilities  may  not  ex- 
ceed one-half  the  value  of  the  corporate  property.  Ch.  150,  § 4. 
Mortgage  of  after  acquired  property  and  franchises  is  authorized. 
L.  1901,  Ch.  66;  L.  1905,  Chs.  61,  hi. 

To  Do  Business  in  Other  States.  A special  incorporation  fee  is 
required  for  corporations  organized  in  the  State  to  carry  on  business 
and  have  their  principal  offices  without  the  State;  and  for  falsely 
pretending  to  carry  on  business  or  have  principal  office  in  the  State 
for  the  purpose  of  avoiding  this  fee,  the  incorporation  is  declared 
void.  Ch.  14,  §§  6,  8. 

Consolidation  or  Merger.  No  statutory  provision. 

Amendment  of  Charter.  May  be  had  to  change  corporate  name, 
increase  or  decrease  capital  stock  or  amend  in  other  respects,  by  ma- 
jority vote  at  a meeting  duly  called  for  that  purpose,  a certified  copy 
of  vote  to  be  recorded  in  the  office  of  the  Secretary  of  State  and  with 
the  clerk  of  the  city  or  town  where  the  principal  place  of  business 
of  the  corporation  is  located.  Ch.  147,  § 5. 


NEW  HAMPSHIRE. 


257 


7.  Capital  Stock. 

Amount.  Must  be  not  less  than  $1,000  and  not  more  than 
$1,000,000.  Ch.  147,  § 6. 

Initial  Payment.  Is  not  prescribed. 

Consideration  for  Issue.  No  corporation  shall  sell  its  capital 
stock  at  less  than  the  par  value,  except  at  auction  for  non-payment 
of  assessments  (Ch.  149,  §9),  and  no  note  or  obligation  given  by  a 
stockholder,  whether  secured  by  pledge  or  otherwise  shall  be  con- 
sidered as  payment  of  any  part  of  the  capital  stock.  Ch.  150,  § 9. 
Certificate  of  full  payment  of  the  capital  stock,  signed  by  the  treasu- 
rer and  a majority  of  the  directors,  must  be  filed  and  recorded  with 
the  clerk  of  the  city  or  town  where  the  corporation  has  its  principal 
place  of  business  (Id.,  §§  8,  14),  or  if  it  has  no  such  place  of  business 
in  the  State,  then  with  the  Secretary  of  State.  Id.,  § 15- 

Assessments  may  be  made  or  fixed  by  the  incorporators  at  the 
first  meeting  or  at  subsequent  meetings,  or  they  may  be  made  by  the 
directors.  Ch.  149,  § 16.  After  default  in  payment  for  thirty  days, 
shares  may  be  sold  at  auction  (Id.,  § 17)  by  notice  published  in  news- 
paper printed  in  the  vicinity  of  the  corporate  office.  Id.,  § 18. 

Increase  or  Decrease.  May  be  effected  by  regular  amendment, 
stock.  Ch.  147,  § 5.  An  attested  copy  of  the  vote  authorizing  in- 
crease or  decrease  must  be  recorded  in  the  office  of  the  clerk  of  the 
town  in  which  the  corporate  business  is  carried  on  and  in  the  office 
of  the  Secretary  of  State.  Ch.  147,  § 7. 

Classes  of  Stock.  Are  authorized  but  without  special  regulations. 
Ch.  149,  § 8. 

Par  Value  of  Shares.  Must  not  be  less  than  $25  (Ch.  149,  § 5) 
nor  more  than  $500.  Ch.  147,  § 6.  May  be  changed  within  these 
limits  without  changing  amount  of  capital  stock.  Ch.  149,  § 7. 

Stock  Certificates.  Every  stockholder  is  entitled  to  a certificate 
signed  by  the  treasurer  or  cashier  and  such  other  officer  as  the  by- 
laws may  prescribe.  No  certificate  is  to  be  issued  until  its  par  value 
has  been  paid.  Ch.  149,  § 10. 

Transfer  of  Stock.  A record  of  the  names  and  residences  of 
stockholders  is  kept  by  the  town  clerk  until  certificate  of  full  payment 
of  capital  stock  has  been  filed  (Ch.  150,  § 10),  and  any  person  trans- 
ferring his  stock  must  cause  to  be  filed  and  recorded  by  such  town 
clerk,  a certificate  of  the  transfer,  with  the  names  and  residences 
of  the  persons  to  whom  sold,  signed  by  the  treasurer  or  clerk  of  the 
corporation.  Id.,  §11.  Transfers  of  full  paid  stock  may  be  made  by 
endorsement,  but  the  purchaser  is  entitled  to  new  certificate.  Ch. 
149,  §§  I3j  14-  No  corporation  may  make  by-laws  restraining  the 
free  sale  of  shares  of  stock.  Ch.  149,  § 15. 

8.  Stockholders. 

Rights  and  Powers.  A majority  controls  amendments.  Ch.  147, 
§ 5.  One-fourth  of  the  stock  may  dissolve  corporation  by  petition 
to  court.  Ch.  148,  § 22.  One-twentieth  compels  meetings.  Id.,  § 16. 


258 


CLASSIFIED  CORPORATION  LAWS. 


They  may  elect  the  president  (Ch.  149,  §4)  and  clerk.  Ch.  148,  §10. 
The  free  sale  of  shares  may  not  be  restrained  by  by-laws.  Ch.  149, 
§ 15.  As  to  minority  stockholders  see  Manchester  Street  Ry.  Co. 
v.  Williams,  71  N.  H.  312  (1903). 

Liability.  Stockholders  are  liable  for  all  corporate  debts  and 
contracts  until  the  whole  amount  of  capital  stock  fixed  and  limited 
by  the  corporation  shall  have  been  paid  in,  and  a sworn  certificate, 
signed  by  the  treasurer  and  a majority  of  the  directors,  has  been 
filed  and  recorded  with  the  clerk  of  the  city  or  town  where  the  cor- 
poration has  its  principal  place  of  business.  Ch.  150,  § 8.  For  accept- 
ing loans  or  illegal  dividends  or  withdrawals  of  capital  stock,  they  are 
liable  for  existing  corporate  debts  and  those  contracted  until  the 
improper  payments  are  repaid  or  made  good  by  payment  to  creditors. 
Id.,  § 7.  Stockholders  are  entitled  to  contribution  on  paying  amount 
of  liability.  Ch.  150,  §§  21,  22. 

Meetings.  It  is  obviously  contemplated  that  stockholders’  meet- 
ings shall  be  held  in  the  State.  Time  of  holding  annual  meeting  may 
be  changed  at  any  legal  meeting.  Ch.  148,  § 15.  If  annual  meeting 
is  not  held  or  can  not  be  called  otherwise,  one-twentieth  of  the  stock 
may  apply  to  a justice  of  the  peace  to  issue  warrant  for  calling.  Id., 
§§  1 6,  I7: 

Notice.  To  be  prescribed  by  by-laws.  Ch.  148,  §6. 

Quorum.  No  statutory  provisions.  May  be  provided  in  by- 
laws. Id. 

Voting.  Every  stockholder  has  one  vote  for  each  share  not 
exceeding  one-eighth  part  of  the  whole  number  of  shares.  Ch.  149, 
§ 19.  Before  voting  he  must  make  oath  before  a justice  of  the  peace, 
that  he  is  bona  fide  owner  in  his  own  right  of  the  shares  claimed  by 
him.  Id.,  §20.  No  shares  to  be  voted  on  which  any  assessment 
remains  due  and  unpaid.  Id.,  §24.  Severe  penalties  are  imposed  for 
fraudulent  voting.  Id.,  §26. 

Proxies.  Must  be  in  writing,  signed  by  a stockholder  entitled 
to  vote  by  proxy,  and  must  be  filed  with  the  clerk  or  cashier.  No 
person  must  vote  as  proxy  for  shares  exceeding  one-eighth  of  the 
whole  capital  stock  and  no  stockholder  acting  as  proxy  for  another 
stockholder  must  vote  in  his  own  right  and  as  such  proxy  on  more 
than  one-eighth  of  the  stock.  Id.,  § 22,  as  amended  L.  1901,  Ch.  68. 
No  proxy  to  be  voted  at  more  than  one  meeting  which  must  be 
specified  therein.  Ch.  149,  § 23. 


9.  Directors. 

Number.  The  directors  must  be  not  less  than  three.  Ch.  149,  § 4. 

Qualifications.  One  director  must  be  a resident  of  the  State, 
if  the  corporation  has  any  stockholders  residing  in  the  State.  Ch. 
149,  § 4- 

Powers.  No  unusual  powers. 

Liability.  For  making  loans  to  stockholders,  for  making  divi- 
dends or  withdrawing  capital  stock  when  corporate  property  is  in- 
sufficient to  pay  debts,  or  thereby  becomes  so,  and  for  permitting 


NEW  HAMPSHIRE. 


259 


corporate  debts  to  exceed  one-half  the  value  of  its  property,  the  di- 
rectors become  individually  liable  for  corporate  debts,  to  the  extent 
of  loans,  dividends  or  amounts  withdrawn.  Ch.  150,  §§  1-5.  A di- 
rector absent  or  entering  his  objection  in  writing  with  the  clerk  at 
the  time  of  such  action,  is  exempted.  Id.,  § 6.  (See  § 10,  “Officers.”) 

Meetings.  No  special  regulations. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  Every  corporation  must  have  a clerk,  chosen  annually 
by  the  stockholders  or  in  such  manner  as  the  by-laws  or  charter  may 
prescribe.  He  must  be  an  inhabitant  of  the  State  and  keep  his  office 
therein.  He  must  be  sworn.  In  case  of  vacancy  the  office  may  be 
filled  by  the  directors  unless  otherwise  provided  by  the  by-laws. 
Ch.  148,  § 10.  He  is  to  record  votes  of  directors  and  stockholders, 
and  keep  a record  of  all  instruments  and  papers.  Id.,  §11.  A presi- 
dent who  must  be  a director  may  be  chosen  by  the  stockholders  or 
directors  as  the  charter  or  by-laws  prescribe.  Ch.  149,  § 4. 

Liability.  For  failure  to  make  and  file  annual  statements  of 
stockholders,  treasurer  or  clerk  forfeits  $50  to  any  person  suing  there- 
for (Ch.  150,  § 12),  and  for  wilful  refusal  to  do  so,  with  intent  to  delay 
and  defraud  creditors,  he  is  fined  not  exceeding  $5,000  or  imprisoned 
not  exceeding  three  years,  or  both.  Id.,  § 13.  For  failure  to  file  and 
record  certificate  of  payment  of  capital  stock  or  annual  report,  direc- 
tors and  officers  are  liable  for  existing  corporate  debts  and  those 
contracted  while  such  failure  continues.  Id.,  §§  14,  16.  For  false 
statements  officers  signing  are  liable  for  debts  contracted  while  they 
are  in  office.  Id.,  § 19. 

For  seven  days’  refusal  to  comply  with  demand  for  copy  of 
records,  etc.,  officer  forfeits  not  exceeding  $1,000  to  person  entitled 
to  receive  it.  Ch.  148,  § 14. 

11.  Principal  Office. 

The  clerk  must  keep  his  office  and  all  records  in  the  State.  Ch. 
148,  § 10.  (See  “Corporate  Books,”  § 12.) 

12.  Corporate  Books. 

What  Required.  The  treasurer,  cashier  or  other  officer  author- 
ized to  issue  stock  certificates,  must  keep  in  his  office  a ^record  of  the 
names  and  residences  of  all  stockholders  and  of  all  changes  of  resi- 
dence, the  number  of  shares  owned  by  each,  all  transfer  of  shares, 
and  of  every  certificate  issued,  and  shall  keep  on  file  all  old  certifi- 
cates, transfers  and  deeds  of  shares  delivered  to  him.  Ch.  149,  § 12. 
Clerk  is  to  record  all  votes  of  directors  and  stockholders  and  all 
instruments  and  papers.  Ch.  148,  §11. 

Where  Kept.  At  clerk’s  office  in  the  State.  Ch.  148,  § 10. 


26o 


CLASSIFIED  CORPORATION  LAWS. 


(New  Hampshire) 

Examination  of.  All  records,  accounts  and  papers  are  to  be 
open  to  the  inspection  of  every  member  or  stockholder.  Such  por- 
tions as  relate  to  overdue  and  unpaid  demands  of  creditors  of  the 
corporation  or  to  the  collection  of  any  such  demand  are  to  be  open  to 
inspection  of  such  creditor  or  his  attorney.  Ch.  148,  § 12.  Certified 
copies  must  be  furnished  on  demand  accompanied  by  payment  or 
tender  of  legal  fees.  Id.,  § 13. 

13.  Reports. 

Until  the  entire  capital  stock  has  been  paid  in  and  certificate 
thereof  filed  and  recorded,  the  clerk  must  annually  in  May  cause  to 
be  filed  and  recorded  with  the  clerk  of  the  town  or  city  in  which  the 
corporation  has  its  principal  place  of  business,  a certified  list  of  names 
and  residences  of  all  stockholders.  Ch.  150,  § 10.  Every  business 
corporation  must  also  file  and  record  in  the  same  manner  a statement 
similarly  executed,  but  also  signed  and  attested  by  a majority  of  the 
directors,  and  filed  and  recorded  also  in  the  office  of  the  Secretary 
of  State,  showing:  (1)  Amount  of  assessments  voted  by  the  corpora- 
tion and  actually  paid  in;  (2)  amount  of  debts  due  to  and  from  the 
corporation;  (3)  value  of  its  property  and  assets  as  of  May  1st. 
Id.,  § 16.  Copies  of  all  reports,  when  printed,  must  be  furnished  to 
State  Librarian.  Ch.  148,  § 20. 

If  a corporation  has  no  place  of  business  in  the  State,  all  certifi- 
cates and  papers  required  by  law  to  be  filed  in  the  town  clerk’s  office 
must  be  filed  with  the  Secretary  of  State.  Ch.  150,  § 15. 

Publication  is  required  only  of  a few  special  notices,  such  as  sale 
of  stock  for  non-payment  of  assessment  and  calling  annual  meeting 
on  warrant.  Ch.  149,  § 18;  Ch.  148,  § 17.  Extent  of  publication  is  not 
prescribed. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  There  are  no  statutory  pro- 
visions permitting  foreign  corporations  to  do  business  in  the  State, 
or  prescribing  procedure  antecedent  thereto,  but  certain  restrictive 
and  permissive  laws  exist  in  regard  to  the  holding  of  real  estate,  etc., 
by  foreign  corporations,  etc.,  and  they  are  permitted  to  sue  and  de- 
fend in  the  State  courts. 

Foreign  manufacturing  companies  are  empowered  to  hold  real 
estate,  and  are  subjected  to  all  the  regulations  as  to  returns  and  taxa- 
tion affecting  domestic  corporations.  Ch.  148,  § 21.  Foreign  corpora- 
tions, clubs,  etc.,  are  forbidden  to  hold  property  in  the  State  for 
hunting,  fishing,  sporting  or  recreation,  without  incorporating  in  the 
State.  L.  1901,  Ch.  9. 

Reports.  All  printed  reports  must  be  filed  with  State  Librarian 
on  or  before  January  1st  of  each  year.  Ch.  148,  § 20. 

15.  Combinations  and  Monopolies. 

No  provisions. 


NEW  JERSEY. 

Enactments  of  1906. 


2.  Taxes  and  Fees. 

Franchise  Tax.  Chapter  9 of  the  Laws  of  1901  imposed  a fran- 
chise tax  on  all  amounts  of  capital  stock  issued  and  outstanding. 
This  is  now  interpreted  by  the  addition  of  the  provision,  “ and  any 
shares  of  stock  either  fully  paid  or  partially  paid  in  cash  or  by  prop- 
erty purchased,  whether  issued  or  otherwise,  shall  be  deemed  to  be 
shares  of  stock  issued  and  outstanding,  until  such  shares  or  any  sub- 
stitute therefor  shall  have  been  retired  and  actually  cancelled.”  L. 
1906,  Ch.  19,  p.  31. 

By  this  amendment  “ treasury  stock,”  i.  e.,  stock  issued  for  value 
and  then,  whether  by  gift  or  purchase,  returned  to  the  treasury  of  the 
issuing  corporation,  is  specifically  declared  to  be  subject  to  taxation. 
The  amendment  was  enacted  to  avoid  the  effect  of  the  decision  in 
Knickerbocker  Importation  Co.  vs.  State  Board  of  Assessors,  62 
Atlantic  Reporter,  266,  which  declared  that  under  the  wording  of 
Chapter  9,  Laws  of  1901,  stock  owned  by  the  corporation  which  issued 
it  was  not  subject  to  the  franchise  tax. 


NEW  JERSEY. 


1.  Corporation  Laws.* 

Constitution.  (1875.)  Corporations  may  not  be  created  by 
special  law.  Art.  IV,  §VII,  subdiv.  11. 

Statutes.  The  general  corporation  law  is  contained  in  the  Laws 
of  1896,  Ch.  185,  and  the  various  acts  and  amendments  subsequent 
thereto.  Under  this  general  law  corporations  may  be  formed  for  any 
lawful  business  except  banking,  building  and  loan,  trust  and  insur- 
ance companies,  and  corporations  exercising  the  power  of  eminent 
domain.  § 6.  Railroads,  telephone  and  telegraph  companies  to  oper- 
ate outside  the  State  may,  however,  incorporate  under  the  general 
law.  § 6;  L.  1899,  Ch.  176.  Various  special  acts  are  provided  for 
corporations  which  can  not  be  formed  under  the  general  act,  as 
follows:  Banks,  trust  and  safe  deposit  companies,  L.  1899,  Chs. 

173-175 ; savings  banks,  G.  S.  (1896),  p.  2999-3018;  insurance,  L.  1902, 
Ch.  134;  building  and  loan  associations,  Id.,  Ch.  218;  canals,  G.  S., 
p.  2635-2719;  railroads,  L.  1903,  Ch.  257;  street  railroads,  G.  S.,  p. 
3207-3248;  telegraph,  telephone  and  electric  light,  G.  S.,  p.  3456-3461; 
corporations  not  for  profit,  L.  1898,  Ch.  181. 

A commission  has  been  appointed  under  L.  1905,  Ch.  30,  to  report 
a revision  of  the  general  corporation  law  to  the  legislature  of  1906. 

2.  Taxes  and  Fees, 

Organization  Expenses.  To  Secretary  of  State:  On  filing  certifi- 
cate of  incorporation,  20  cents  per  $1,000  of  capital  stock;  minimum 
fee,  $25  (§114);  recording,  10  cents ’per  folio  of  100  words;  minimum 
charge,  $1  (L.  1904,  Ch.  148);  filing  list  of  officers  and  directors,  $1 
(§  1 14);  certifying  copy  of  charter,  $1.  Id. 

To  County  Clerk  for  recording  certificate  of  incorporation,  10 
cents  per  folio. 

Franchise  Tax.  An  annual  tax,  payable  on  or  before  July  1st, 
is  imposed  on  all  capital  stock,  issued  and  outstanding,  as  follows: 
On  amounts  up  to  $3,000,000,  one-tenth  of  one  per  cent.;  from 
$3,000,000  to  $5,000,000,  one-twentieth  of  one  per  cent.;  for  every 
$1,000,000  over  $5,000,000,  $50.  Delinquent  taxes  bear  interest  at 
rate  of  one  per  cent,  a month.  L.  1901,  Ch.  9.  Corporations  having 
fifty  per  cent,  or  more  of  their  capital  invested  in  manufacturing  or 
mining  in  the  State  are  exempt  from  this  tax  and  those  having  less 


References,  unless  otherwise  stated,  are  to  Laws  of  1896,  Chapter  185. 

26l 


262 


CLASSIFIED  CORPORATION  LAWS. 


than  fifty  per  cent,  invested  in  the  State  are  entitled  to  deduction  of 
the  amount  of  capital  so  invested  from  their  assessable  capital  stock. 
Id.  The  franchise  tax  is  assessed  on  par  value  of  shares  without 
regard  to  actual  value.  Singer  Mfg.  Co.  v.  Heppenheimer,  58  N.  J. 
L-  633. 

Stock  owned  by  the  corporation  which  issued  it,  is  not  subject 
to  the  franchise  tax.  Knickerbocker  Imp.  Co.  v.  Board  of  Assessors, 
N.  J.  Supreme  Court,  Nov.  Term,  1905. 

Local  Taxation.  Corporate  property  is  taxed  as  that  of  individ- 
uals. § no.  Shares  are  not  taxed  when  the  corporation  is  taxed  on 
its  property.  L.  1903,  Ch.  208,  § 3,  subdiv.  5.  The  assessor  may  ex- 
amine officers  under  oath.  Id.,  § 14. 

General.  To  Secretary  of  State:  On  increase  of  capital  stock, 

20  cents  for  each  $1,000  of  increase;  minimum  fee,  $20;  consolidation 
and  merger,  20  cents  for  each  $1,000  beyond  the  total  authorized 
capital  of  the  corporation  consolidated;  minimum  fee,  $20;  extension 
or  renewal  of  corporate  existence,  same  fees  as  on  original  incorpora- 
tion; dissolution,  change  of  name  or  business,  decrease  of  capital 
stock,  change  in  par  value  of  shares,  or  other  amendment  to  charter 
except  increase  of  stock,  $20;  any  other  certificate,  $5.  Annual  re- 
port, $1.  § 114.  Change  in  location  of  principal  office;  by  amend- 

ment of  charter,  $20  (§  27);  by  resolution  of  board  of  directors, 
$5.  L.  1897,  Ch.  85. 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 6.  They  need  not  be 
residents  of  State.  Central  R.  R.  Co.  of  N.  J.  v.  Pa.  R.  R.  Co.,  31 
N.  J.  Eq.  485. 

Certificate  of  Incorporation.  Must  be  signed  and  acknowledged 
by  the  incorporators  as  is  required  for  deeds  of  real  estate.  A New 
Jersey  notary  public  can  not  take  acknowledgments.  §9.  Acknowl- 
edgments outside  the  State  are  preferably  taken  before  a New  Jersey 
commissioner  of  deeds  or  master  in  chancery.  If  taken  before  notary 
of  other  state,  certificate  of  his  authority  must  be  attached. 

The  certificate  must  set  forth  (§  8) : 

(1)  Name  of  the  corporation.  This  must  be  in  the  English 
language  (L.  1903,  Ch.  149)  and  not  resemble  that  of  any 
existing  corporation  so  closely  as  to  lead  to  confusion.  § 8. 
May  be  changed  by  amendment.  § 27.  Must  be  displayed 
at  principal  office.  § 45.  Of  ordinary  corporations  must  not 
include  words  “ insurance,”  “ safe  deposit,”  “ trust  company  ” 
or  “ bank.”  L.  1897,  Ch.  155. 

(2)  Location  of  principal  and  subordinate  offices  in  the 
State.  The  exact  location  of  the  principal  office  must  be  set 
forth  and  the  name  of  the  agent  in  charge,  upon  whom  pro- 
cess against  the  corporation  may  be  served,  must  be  given. 
L.  1898,  Ch.  173. 


NEW  JERSEY. 


263 


(3)  The  object  or  objects  for  which  it  is  formed.  These 
are  usually  stated  with  great  amplitude.  § 8.  If  it  is  desired 
to  conduct  business  outside  the  State,  it  must  be  so  stated. 
§7. 

(4)  Amount  of  capital  stock,  not  less  than  $2,000,  and 
amount  with  which  it  will  begin  business,  not  under  $1,000; 
the  number  of  shares  and  their  par  value;  description  of 
classes  of  stock,  if  classified,  and  terms  of  issue.  § 8.  Pre- 
ferred stock  must  not  be  more  than  two-thirds  of  the  total 
paid  up  capital  stock.  § 18. 

(5)  Names  and  addresses  of  the  incorporators  and  number 
of  shares  subscribed  by  each.  The  address  of  the  principal 
office  may  be  given  as  the  address  of  the  incorporators.  L. 
1898,  Ch.  173. 

(6)  Period,  if  any,  limited  for  its  duration.  Is  perpetual  if 
not  limited.  § 1. 

(7)  Any  other  provisions  not  inconsistent  with  law  which 
the  incorporators  may  choose  to  insert  for  the  regulation  of 
the  business  and  for  the  conduct  of  the  affairs  of  the  corpora- 
tion, and)  any  provision  creating,  defining,  limiting  and  regu- 
lating the  powers  of  the  corporation,  the  directors  and  the 
stockholders,  or  any  class  or  classes  of  stockholders. 

The  foregoing  provision  gives  exceptionally  broad  scope  for 
charter  regulation  of  the  corporate  powers  and  affairs.  In  addition 
the  following  charter  provisions  are  specifically  mentioned  and  au- 
thorized by  the  statutes:  Empowering  directors  to  make  and  alter 

by-laws  (§11);  classifying  directors  (§12);  giving  to  any  class  or 
classes  of  stock  the  sole  right  to  choose  directors  of  some  specified 
class  (Id.);  regulating  the  manner  of  calling  and  conducting  meet- 
ings, the  voting  power  of  stock,  and  fixing  number  of  shares  or 
amount  of  stock  in  interest — but  not  more  than  a majority — necessary 
to  constitute  a quorum  (§17);  providing  that  any  action  which  now 
requires  the  consent  of  the  holders  of  two-thirds  of  the  entire  stock 
at  any  meeting  after  notice  to  them  given,  or  requires  their  consent 
in  writing  to  be  filed,  may  be  taken  upon  the  consent  of  and  the 
consent  given  and  filed  by  the  holders  of  two-thirds  of  the  stock  of 
each  class  represented  at  such  meeting  in  person  or  proxy  (Id.;  L. 
1901,  Ch.  1 19);  giving  directors  power  to  fix  amount  to  be  reserved 
from  profits  before  payment  of  dividends  (§  47) ; and  prescribing 
cumulative  voting.  L.  1900,  Ch.  172.  If  meetings  of  directors  are  to 
be  held  without  the  State,  it  must  be  so  provided  in  the  certificate  of 
incorporation  or  in  the  by-laws.  § 44. 

Filing  and  Recording.  Certificate  of  incorporation  must  be  re- 
corded with  the  clerk  of  the  county  where  the  principal  office  is 
located  and  a copy  certified  by  the  clerk  is  then  filed  with  Secretary 
of  State.  As  a matter  of  convenience  a copy  of  the  original  charter 
is  usually  provided  for  the  clerk’s  record.  The  clerk  then  merely 
compares  the  copy  with  the  original  and  endorses  the  original  without 
further  delay  as  having  been  recorded.  A copy  certified  by  Secretary 
of  State  is  evidence  in  all  courts  and  places.  § 9. 


264 


CLASSIFIED  CORPORATION  LAWS. 


4.  Organization. 

First  Meetings.  Must  be  held  within  the  State.  May  be  called 
by  notice  signed  by  majority  of  the  incorporators,  designating  time, 
place  and  purpose,  and  published  for  two  weeks  in  newspaper  in 
county  where  corporation  is  established;  or  two  days’  personal  notice 
may  take  place  of  publication,  or  notice  may  be  dispensed  with  by 
unanimous  written  consent  of  the  incorporators  or  their  authorized 
attorneys.  § 16;  L.  1902,  Ch.  58.  Voting  by  proxy  is  allowed  (§  17) 
and  likewise  cumulative  voting  if  so  provided  in  the  certificate  of 
incorporation.  L.  1900,  Ch.  172.  At  this  meeting  by-laws  are  adopted, 
directors  are  elected  to  serve  for  the  first  year,  and  if  stock  is  to  be 
issued  for  property,  the  directors  are  usually  authorized  thereto  by 
formal  resolution. 

The  first  meeting  of  directors  usually  follows  immediately  after 
the  adjournment  of  the  first  meeting  of  stockholders.  It  is  usually 
assembled  by  written  call  and  waiver  of  notice,  otherwise  by  such 
means  as  may  be  prescribed  in  the  by-laws.  At  this  meeting  the 
officers  for  the  ensuing  year  are  chosen;  if  stock  is  to  be  issued  for 
property,  the  matter  is  arranged  by  formal  procedure;  if  the  corpo- 
ration is  non-resident,  a registered  state  office  is  provided  for  with 
an  agent  therein,  and  such  other  matters  are  provided  for  as  may  be 
necessary  to  begin  corporate  operations. 

The  use  of  “ dummy  ” incorporators  and  directors  is  common. 

By-Laws.  Are  usually  adopted  by  the  stockholders  at  their  first 
meeting,  unless  the  certificate  of  incorporation  delegates  the  power 
to  adopt  by-laws  to  directors.  §11.  By-laws  may  provide  for  the 
management  of  the  property  and  corporate  affairs;  for  transfer  of 
stock;  may  fix  or  alter  the  number  of  directors  (§1);  may  provide 
for  offices  and  for  directors’  meetings  outside  the  State  (§44);  may 
designate  date  for  election  of  directors  (§41);  determine  the  number 
of  shares  to  be  held  to  qualify  as  director  (§39);  fix  time  of  declar- 
ing dividends  and  amount  of  reserve  for  working  capital  (§47);  pre- 
scribe method  of  filling  vacancies  on  board  of  directors  or  among 
officers  (§15);  may  fix  penalty,  not  exceeding  $20,  for  breach  of 
by-laws  (§1);  and  provide  generally  for  the  corporate  affairs  and 
their  regulation.  Id. 

Certificates.  A certificate  of  election  of  directors  and  officers 
must  be  filed  in  the  office  of  the  Secretary  of  State  within  thirty  days 
after  every  election.  § 43.  (See  § 13,  “ Reports.”) 

5.  Corporate  Existence. 

When  Commenced.  Incorporation  is  complete  and  the  corporate 
existence  begins  when  the  certificate  has  been  filed  and  recorded  in 
office  of  the  Secretary  of  State.  § 10.  It  is  perpetual  unless  limited 
in  certificate  of  incorporation.  § 1. 

Beginning  Business.  In  practice  is  commenced  as  soon  as  cer- 
tificate has  been  filed  and  recorded  by  Secretary  of  State. 

Renewal.  May  be  effected  by  regular  amendment.  § 27. 

Forfeiture  of  Charter.  Neglect  or  refusal  for  two  consecutive 
years  to  pay  the  State  taxes  is  ground  for  forfeiture  on  proclamation 


NEW  JERSEY. 


265 


of  the  governor,  though  governor  may  allow  extra  time  for  payment. 
L.  1905,  Ch.  259.  May  occur  at  suit  of  the  Attorney  General  for 
ultra  vires  acts.  Camden  and  Atlan.  R.  R.  Co.  v.  Mays  Landing 
R.  R.  Co.,  7 Atl.  523  (1886). 

Failure  to  obey  order  of  court  of  chancery  or  supreme  court  to 
bring  books  into  the  State,  may  cause  forfeiture  by  direction  of  the 
court  making  the  order.  § 44. 

Dissolution.  Before  the  payment  of  any  portion  of  the  capital 
or  beginning  business,  the  incorporators  may  relinquish  their  rights 
and  franchises  by  filing  with  the  Secretary  of  State  a sworn  certifi- 
cate surrendering  all  rights  and  franchises  and  setting  forth  that  no 
part  of  the  capital  has  been  paid. 

Thereafter  dissolution  must  be  effected  by  resolution  adopted  at 
meeting  of  directors  called  on  three  days’  notice  for  that  purpose. 
Notice  of  the  adoption  of  such  resolution  must  within  ten  days  there- 
after be  mailed  to  each  stockholder  resident  in  the  United  States 
and  also  be  published  in  a newspaper  in  the  county  of  the  principal 
office  once  a week,  at  least  four  weeks  successively  next  preceding 
the  time  appointed  for  a special  stockholders’  meeting.  Such  meeting 
must  be  held  between  10  a.  m.  and  3 p.  m.  and  if  two-thirds  in  interest 
of  all  the  stockholders  shall  consent  to  dissolution  and  signify  their 
consent  in  writing,  such  consent  in  writing,  together  with  a list  of 
the  names  and  residences  of  the  directors  and  officers,  certified  by 
the  president  and  the  secretary  and  treasurer,  shall  be  filed  with  the 
Secretary  of  State,  who  shall  then  issue  a certificate  that  such  consent 
has  been  filed.  This  certificate  must  be  published  once  a week  for 
four  successive  weeks  in  the  county  of  the  principal  office  and  upon 
filing  affidavit  of  such  publication  with  the  Secretary  of  State  the 
corporation  is  dissolved.  § 31. 

Dissolution  may  be  effected  without  meeting  by  unanimous  writ- 
ten consent  of  all  the  stockholders  with  filing  and  publication  as 
above.  Id. 

All  State  taxes  must  be  paid  before  dissolution.  L.  1900,  Ch.  126. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 1. 

To  Hold  Property.  Limited  to  the  real  and  personal  property 
necessary  for  corporate  purposes  and  such  real  estate  as  may  be 
taken  as  security  for  or  in  satisfaction  of  debts  or  purchased  at  judg- 
ment sale.  § 1. 

Its  Own  Stock.  A corporation  may  hold  its  own  stock 
(§29)  and  may  even  purchase  it  on  credit.  Berger  v.  U.  S.  Steel 
Corp.,  63  N.  J.  Eq.  506  (1902).  Such  shares  may  not  be  voted  directly 
or  indirectly  (§38),  and  are  not  subject  to  franchise  tax  while  held 
by  the  corporation.  Knickerbocker  Imp.  Co.  v.  Board  of  Assessors, 
N.  J.  Supreme  Court,  Nov.  Term,  1905. 

Stock  of  Other  Corporations.  This  power  is  fully  con- 
ferred by  statute.  While  owner  of  any  such  stock  all  powers  of 
ownership  may  be  exercised  including  the  right  to  vote.  § 51. 

To  Borrow  Money.  No  statutory  limitations.  Bonds  may  be 
issued  to  an  unlimited  amount.  Berger  v.  U.  S.  Steel  Corp.,  63  N.  J. 
Eq.  506  (1902).  Real  estate  and  personal  property  including  fran- 


266 


CLASSIFIED  CORPORATION  LAWS. 


chises  may  be  mortgaged.  § i.  Bonds  may  be  converted  into  com- 
mon stock  at  any  time  after  two  years  if  so  stated  in  the  bonds.  L. 
1902,  Ch.  58. 

To  Do  Business  in  Other  States.  Any  corporation  may  conduct 
business  in  other  states  or  in  foreign  countries  and  have  one  or  more 
offices  out  of  the  State,  and  may  hold,  purchase,  mortgage  and  con- 
vey real  and  personal  property  out  of  the  State;  provided  such 
powers  are  included  within  the  objects  set  forth  in  its  certificate  of 
incorporation.  § 7. 

Consolidation  or  Merger.  Corporations  organized  for  similar 
purposes  may  consolidate  into  a single  corporation,  which  may  be 
either  one  of  the  merging  companies  or  a new  corporation.  § 104. 
Detailed  procedure  and  resulting  powers  and  duties  are  contained  in 
§§  105-109.  Dissenting  stockholders  may,  by  proper  procedure,  have 
their  stock  appraised  and  enforce  payment  therefor  against  the  con- 
solidated corporation.  § 108;  L.  1902,  Ch.  241. 

Amendment  of  Charter.  Before  any  part  of  the  capital  has  been 
paid  in,  the  incorporators  may  amend  the  certificate  by  filing  an 
amended  certificate  in  the  same  manner  as  was  the  original.  L.  1898, 
Ch.  172.  Subsequent  amendments  may  change  the  nature  of  the 
business  of  the  corporation;  change  its  name;  increase  or  decrease 
its  capital  stock;  change  the  par  value  of  the  shares  or  the  location 
of  its  principal  office  in  the  State;  extend  its  corporate  existence; 
create  one  or  more  classes  of  preferred  stock,  and  make  such  other 
change  or  alteration  as  may  be  desired.  Any  such  amendment  must 
be  made  by  resolution  of  the  directors  advising  the  change  and  calling 
meeting  of  the  stockholders  by  such  notice  as  the  by-laws  provide, 
or,  in  the  absence  of  such  provision,  on  ten  days’  notice  served  per- 
sonally or  by  mail.  If  two-thirds  in  interest  of  each  class  of  stock- 
holders having  voting  powers  assent  to  such  amendment,  a certificate 
thereof  shall  be  executed  under  the  corporate  seal,  and  be  acknowl- 
edged as  for  deeds  of  real  estate,  by  the  president  and  secretary,  and 
shall  be  filed,  together  with  the  written  assent,  in  person  or  by  proxy, 
of  two-thirds  in  interest  of  each  class  of  stockholders,  with  the  Sec- 
retary of  State.  His  certificate  is  evidence  of  the  change.  § 27. 

The  location  of  the  principal  office  may  be  changed  within  the 
State  by  a two-thirds  vote  of  the  directors.  If  such  removal  is  to 
another  town  or  city,  a copy  of  the  resolution  signed  by  the  president 
and  secretary  and  under  the  corporate  seal  shall  be  filed  with  the 
Secretary  of  State.  L.  1897,  Ch.  85,  p.  175. 

7.  Capital  Stock. 

Amount.  Must  be  stated  in  certificate  of  incorporation.  Mini- 
mum, $2,000.  § 8.  No  maximum  limit. 

Initial  Payment.  At  least  $1,000  must  be  subscribed.  § 8.  Time 
of  payment  is  not  prescribed. 

Consideration  for  Issue.  The  corporation  may  issue  stock  for 
money  or  for  “ property  necessary  for  its  business,”  and  issue  stock 
to  the  amount  of  the  value  thereof  in  payment  therefor,  and  the  stock 


NEW  JERSEY. 


267 


so  issued  shall  be  full-paid  stock  and  not  liable  to  any  further  call, 
neither  shall  the  holder  thereof  be  liable  for  any  further  payment 
under  any  of  the  provisions  of  this  act;  and  in  the  absence  of  actual 
fraud  in  the  transaction,  the  judgment  of  the  directors  as  to  the 
value  of  the  property  purchased  shall  be  conclusive.  §48;  Plaque- 
mines T.  F.  Co.  v.  Buck,  52  N.  J.  Eq.  219  (1893). 

When  capital  stock  is  full  paid,  certificate  thereof  must  be  filed 
with  Secretary  of  State.  If  not  filed  within  thirty  days  after  demand 
therefor  by  any  stockholder  or  creditor,  the  officers  so  failing  are 
liable  while  such  failure  continues  for  corporate  debts.  §§  25,  26. 
(See  “ Reports,”  § 13.) 

Assessments,  not  exceeding  in  the  whole  the  par  value  of  the 
stock,  may  be  made  in  the  discretion  of  the  directors,  on  thirty  days’ 
notice  served  personally  or  by  mail  and  published  in  newspaper  of 
county  where  corporation  is  established.  § 22.  Stock  delinquent  for 
thirty  days  may  be  sold.  §§  23,  24. 

Increase  or  Decrease.  May  be  effected  by  regular  amendment. 
§ 27.  “ The  decrease  of  capital  stock  may  be  effected  by  retiring  or 

reducing  any  class  of  the  stock,  or  by  drawing  the  necessary  number 
of  shares  by  lot  for  retirement,  or  by  the  surrender  by  every  share- 
holder of  his  shares,  and  the  issue  to  him  in  lieu  thereof  of  a de- 
creased number  of  shares,  or  by  the  purchase  at  not  above  par  of 
certain  shares  for  retirement,  or  by  retiring  shares  owned  by  the  cor- 
poration or  by  reducing  the  par  value  of  shares.”  Certificate  of  de- 
crease must  be  published  in  county  where  principal  office  is  located 
once  a week  for  three  successive  weeks.  The  first  publication  must 
be  made  within  fifteen  days  after  certificate  of  reduction  is  filed  with 
Secretary  of  State,  under  penalty  of  personal  liability  of  directors  for 
corporate  debts  contracted  before  compliance,  and  liability  on  the 
part  of  stockholders  for  any  amount  of  capital  received  by  them 
under  such  reduction.  § 29. 

Classes  of  Stock.  Two  or  more  kinds  of  stock  may  be  created 
with  such  designations,  preferences  and  voting  powers  as  may  be 
stated  in  the  original  or  amended  certificate  of  incorporation.  § 18. 
The  amount  of  preferred  stock  issued  must  never  exceed  two-thirds 
of  the  paid  up  capitalization.  Id.  It  may  be  made  subject  to  re- 
demption at  any  time  after  three  years  from  the  date  of  issue  at  not 
less  than  par.  Id.  Preferred  dividends  may  be  made  cumulative, 
and  payable  before  common  dividends  are  paid;  but  must  not  exceed 
eight  per  cent,  per  annum  and  be  payable  quarterly,  half  yearly,  or 
yearly.  Id.  Preferred  stockholders  are  not  liable  for  corporate 
debts.  Id.  In  case  of  insolvency  the  corporate  obligations  are  paid 
in  preference  to  the  preferred  stock.  Id. 

Par  Value  of  Shares.  May  be  any  amount.  § 8. 

Stock  Certificates.  Every  stockholder  shall  have  a certificate 
signed  by  president  and  treasurer  certifying  the  number  of  shares 
owned.  § 19. 

Transfer  of  Stock.  Transfers  of  stock  must  be  entered  on  the 
books  of  the  corporation  in  such  manner  and  under  such  regu- 
lations as  the  by-laws  provide.  Transfers  made  for  purposes  of 
collateral  security  shall  so  state  in  the  entry  of  transfer.  § 20. 


263 


CLASSIFIED  CORPORATION  LAWS. 


8.  Stockholders. 


Rights  and  Powers.  They  control  amendments  to  the  charter 
by  a two-thirds  vote.  § 27.  May  elect  officers  if  so  provided  in  the 
by-laws.  § 13.  By-laws  are  always  subject  to  their  control.  § 11. 
Merger,  dissolution  or  lease  of  property  and  franchise  must  receive 
vote  of  two-thirds  of  the  stock.  §§31,  105;  L.  1899,  Ch.  150.  On 
application  of  any  one  stockholder,  a justice  of  the  supreme  court  will 
order  holding  of  omitted  elections  and  investigate  same.  §§  41,  42. 

Liability.  Extends  to  unpaid  subscriptions.  § 21.  They  are 
liable  for  the  amount  received  in  case  of  an  unlawful  reduction  of 
the  capital.  §§  29,  30. 

Meetings.  Must  be  held  at  registered  office  in  State.  § 44. 

Notice.  May  be  prescribed  in  certificate  of  incorporation  or  by- 
laws. § 17.  Twenty  days  is  fixed  by  statute  as  time  for  notice  of 
meeting  to  pass  upon  proposition  to  consolidate  with  another  cor- 
poration (§  105),  and  notice  of  meeting  for  dissolution  must  be  pub- 
lished once  a week  for  four  successive  weeks.  §31.  Notice  may 
always  be  waived  by  unanimous  written  consent.  § 16. 

Quorum.  May  be  fixed  by  the  certificate  of  incorporation  or 
the  by-laws.  But  more  than  a majority  of  the  stock  must  not  be 
required.  §§  17,  34- 

Voting.  In  the  absence  of  a contrary  provision  in  certificate  or 
by-laws,  each  stockholder  is  entitled  to  one  vote  for  each  share  of 
stock  he  owns.  No  share  of  stock  may  be  voted  at  an  election  if  it 
has  been  transferred  on  the  books  within  twenty  days  of  the  date 
thereof.  § 36.  Cumulative  voting  may  be  provided  for  in  certificate 
of  incorporation.  L.  1900,  Ch.  172. 

Proxies.  Voting  by  proxy  is  allowed  at  any  stockholders’  meet- 
ing. § 17.  Proxy  is  void  after  three  years.  § 36.  The  appearance 
of  the  stockholder  at  the  meeting  operates  as  revocation  of  a proxy 
or  power  of  attorney.  Chapman  v.  Bates,  61  N.  J.  Eq.  658  (1900). 

Voting  Trusts.  No  statutory  provision.  Voting  trusts  have, 
however,  been  sustained  in  the  New  Jersey  courts  where  their  objects 
were  legitimate.  Chapman  v.  Bates,  61  N.  J.  Eq.  667  (1900). 


9.  Directors. 

General.  By  provision  therefor  in  the  certificate  of  incorpora- 
tion, directors  may  be  divided  into  classes,  no  term  to  be  less  than 
one  year  or  more  than  five  years  and  one  class  to  be  elected  each 
year.  If  not  so  provided,  directors  are  elected  annually  for  one  year 
and  hold  office  until  others  are  chosen  and  qualified  in  their  stead. 
§ 12.  The  certificate  of  incorporation  may  also  provide  that  one  class 
of  directors  may  be  elected  by  any  class  or  classes  of  stock  exclu- 
sively. Id. 

Number.  Must  not  be  less  than  three.  § 12.  Unless  fixed  in 
certificate  of  incorporation  the  number  may  be  changed  by  amend- 
ment to  the  by-laws.  § 1. 


XEW  JERSEY. 


269 


Qualifications.  One  at  least  must  be  a resident  of  State.  § 12. 
All  must  be  stockholders.  Any  director  ceasing  to  be  a bona  fide 
stockholder,  ceases  to  be  a director.  Number  of  shares  a director 
must  hold  is  fixed  by  certificate  of  incorporation  or  b3T-laws.  § 39. 

Powers.  The  directors  have  full  power  to  manage  the  business 
and  affairs  of  the  corporation.  § 12.  They  choose  officers  unless 
otherwise  provided  by  the  b3T-laws.  § 13.  Power  to  make  b37-laws 
may  be  delegated  to  them.  §11.  The3^  fill  vacancies  in  board  unless 
b 3-laws  direct  differenth'.  § 15.  The3r  remain  trustees  on  dissolution. 
§ 54.  They  ma3'  change  the  location  of  principal  office  in  the  State. 
L.  18973  Ch.  85.  p.  175- 

Liability.  Liabilities  are  imposed  on  directors  making  unlawful 
dividends  or  loans  to  stockholders,  and  for  making  false  reports  and 
for  other  breaches  of  trust.  §§  30,  33.  Also  for  failure  to  publish 
notice  of  an3T  decrease  of  stock.  § 29.  Absent  or  dissenting  directors 
ma3*  relieve  themselves  from  liability  for  such  acts  b3*  causing  dissent 
to  be  entered  on  minutes  at  large  at  the  time  or  when  they  have 
notice  of  an37  such  unlawful  act,  any  such  entry  to  be  followed  b3T 
publication  of  a true  cop3'  of  such  dissent  within  two  weeks  thereafter 
in  a newspaper  of  the  count3T  in  which  the  principal  office  of  the 
corporation  is  located.  §30.  They  are  jointly  and  severally  liable 
to  a fine  of  S200  for  failure  to  displaj^  name  of  corporation  at  entrance 
to  principal  office.  § 45.  For  failure  to  file  certificate  of  pa3Tment 
of  capital  stock  within  thirty^  da3Ts  after  written  request  so  to  do  by 
director  or  stockholder,  the  officers  become  personalK"  liable  for 
corporate  debts  contracted  up  to  time  of  compliance.  § 26. 

Meetings.  Ma3~  be  held  outside  the  State,  if  so  provided  in  b3'- 
laws  or  certificate  of  incorporation.  § 44.  Notice  should  be  provided 
for  in  b3T-laws.  The  number  necessary^  to  constitute  a quorum  may 
be  provided  for  in  the  certificate  of  incorporation.  § 8,  subdiv.  VII. 
In  the  absence  of  such  provision,  a majorit3T  is  a quorum.  Met.  Tel. 
Co.  v.  Dom.  Tel.  Co.,  44  N.  J.  Eq.  573  (1888). 


Executive  Committee.  Ma3T  be  provided  for  in  certificate  of  in- 
corporation. § 8,  subdiv.  VII. 

10.  Officers. 

The  necessary^  officers  are  a president,  chosen  from  among  the 
directors,  a secretao*  and  treasurer.  They^  may  be  chosen  either  b3T 
the  stockholders  or  the  directors  as  provided  in  by-laws.  The  secre- 
tary" must  take  an  oath  of  office  and  the  treasurer  must  give  bond. 
§13.  Such  other  officers  may  be  elected  as  by^-laws  prescribe.  § 14. 
In  the  absence  of  other  provision  in  by-laws,  the  directors  fill  vacan- 
cies. § 15.  A resident  agent  must  be  maintained.  § 44. 

Liability.  They"  are  liable  for  certificates  or  publications  materi- 
ally" false  (§  52),  for  refusal  to  exhibit  transfer  or  stock  books  or 
alphabetical  list  of  stockholders  (§  32),  or  for  refusal  to  file  certificate 
of  payment  of  capital  stock  within  thirty"  day"s  after  request  there- 
for. § 26. 


270 


CLASSIFIED  CORPORATION  LAWS. 


11.  Principal  Office. 

Must  be  maintained  in  the  State  with  resident  agent  in  charge. 
§§  8,  44.  The  name  of  the  corporation  must  be  conspicuously  dis- 
played at  the  entrance  under  penalty  of  $200  fine  from  the  directors. 
§ 45.  Location  may  be  changed  by  regular  amendment  (§  27)  costing 
$20  (§  1 14),  or  by  resolution  of  the  board  of  directors  adopted  by  two- 
thirds  vote  and  filed  with  the  Secretary  of  State  at  a cost  of  $5. 
L.  1897,  Ch.  85.  Location  of  principal  office  and  name  of  agent  must 
be  set  forth  in  every  public  certificate,  report  and  statement.  L.  1898, 
Ch.  173. 

12.  Corporate  Books. 

A transfer  book  in  which  the  transfer  of  stock  shall  be  registered, 
and  stock  books  which  shall  contain  the  names  and  addresses  of 
stockholders  and  the  number  of  shares  held  by  them  respectively, 
must  be  kept  at  principal  office  in  the  State.  §§  33,  44.  Directors  may 
be  allowed  to  keep  all  other  books  outside  the  State  by  so  providing 
in  the  by-laws.  Id.  Must  be  open  to  inspection  of  bona  fide  stock- 
holders during  usual  hours  of  business  (§  33)  and  may  be  ordered 
brought  within  the  State  by  court  of  chancery  or  supreme  court. 
§44;  O’Hara  v.  Nat.  Biscuit  Co.,  54  Atl.  241  (1903).  Secretary  must 
keep  record  of  all  votes  of  corporation  and  directors.  § 13. 

13.  Reports. 

Within  thirty  days  after  the  first  election  of  directors  and  officers 
and  annually  thereafter  within  thirty  days  after  the  date  of  the 
annual  meeting,  the  corporation  must  file  with  Secretary  of  State  a 
report  signed  by  the  president  and  one  other  officer  or  by  any  two 
directors,  stating:  (1)  Name  of  the  corporation.  (2)  Location  of  its 
registered  office  and  name  of  agent  in  charge  thereof.  (3)  Character 
of  business.  (4)  Amount  of  authorized  capital  stock  and  amount 
issued  and  outstanding.  (5)  Names  and  addresses  of  all  directors 
and  officers  and  when  their  terms  expire.  (6)  Date  of  next  annual 
election.  (7)  Whether  name  has  at  all  times  been  displayed  at  prin- 
cipal office,  and  transfer  and  stock  books  kept  there.  Penalty  for  not 
filing  report,  $200  fine.  § 43. 

Annual  returns  must  be  made  to  State  Board  of  Assessors  on  or 
before  the  first  Tuesday  in  May,  showing  amount  of  capital  stock 
issued  and  outstanding  on  January  1st  preceding  (L.  1901,  Ch.  9), 
and  any  deductions  or  exemption  claimed  as  manufacturing  or  mining 
corporation,  describing  mines  or  manufacturing  plants  in  detail.  Id. 

Certificate  of  payment  of  capital  stock,  signed  by  president  and 
secretary  or  treasurer,  must  be  filed  within  ten  days  of  payment  (§  25) 
and  if  not  so  filed  any  stockholder  or  creditor  may  demand  the  same 
and  upon  failure  to  file  such  certificate  within  thirty  days  after  such 
demand,  the  officers  so  failing  are  liable  for  debts  of  the  company 
until  such  certificate  is  filed.  § 26. 

Every  certificate  and  report  must  set  forth  the  location  (with 
street  and  number,  if  any)  of  the  principal  office  in  the  State  and  the 
name  of  the  agent  in  charge  thereof  upon  whom  process  may  be 
served.  § 43. 


NEW  JERSEY. 


271 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  A copy  of  charter  or  certificate 
of  incorporation,  attested  by  the  president  and  secretary  and  under 
the  corporate  seal,  and  a statement  similarly  attested,  showing  the 
amount  of  capital  stock  authorized,  amount  issued,  character  of  busi- 
ness to  be  transacted  in  the  State,  and  naming  an  office  in  the  State 
and  an  agent,  who  must  be  a domestic  corporation  or  a resident  of 
full  age,  in  charge  to  receive  service  of  process,  with  the  place  of 
abode  of  such  agent,  must  be  filed  with  the  Secretary  of  State.  The 
Secretary  will  thereupon  issue  a certificate  entitling  the  corporation 
to  do  business  in  the  State.  § 97. 

Fees  to  Secretary  of  State  for  filing  charter  and  statement,  $10; 
for  filing  report,  $1.  And  in  addition  retaliatory  fees,  if  New  Jersey 
corporations  are  compelled  to  pay  higher  taxes  in  the  home  state  of 
such  corporation.  § 101. 

Penalties  for  Non-Compliance.  Inability  to  enforce  contracts  in 
the  State  (§  98)  and  fine  of  $200.  § 100. 

Taxation.  Corporations  regularly  doing  business  in  the  State 
and  not  being  corporations  of  the  State,  shall  be  taxed  on  the  busi- 
ness done  by  them  in  the  State  and  assessed  for  the  amount  of  capital 
usually  employed  in  the  State  in  such  business,  not  otherwise  taxed 
as  real  or  tangible  personal  property,  such  assessment  to  be  made 
in  the  district  in  which  such  business  is  usually  carried  on.  L.  1903, 
Ch.  208,  § 16.  Mortgages  held  by  such  corporation  are  exempt.  Id. 
There  is  also  retaliatory  taxation,  if  New  Jersey  corporations  pay 
higher  taxes  in  home  state  of  any  corporation.  L.  1894,  Ch.  228. 

(The  foregoing  provision  was  superseded  by  the  Act  of  1904, 
[L.  1904,  Ch.  221],  which  provided  at  length  for  the  taxation  of  for- 
eign corporations.  This  Act  was,  however,  repealed  at  the  last  ses- 
sion of  the  New  Jersey  Legislature  [L.  1905,  Ch.  37],  leaving  the 
taxation  of  foreign  corporations  as  it  was  before  the  Act  of  1904  was 
passed.) 

Books.  No  statutory  provision.  Foreign  corporations  are  ex- 
pressly exempted  from  the  provision  as  to  keeping  stock  and  transfer 
books  at  principal  office  in  the  State.  § 43. 

Reports.  Must  make  same  annual  report  to  Secretary  of  State 
as  domestic  companies.  § 43. 

Attachments  Against.  If  regularly  admitted  to  do  business  in 
the  State,  the  mere  fact  that  a corporation  is  foreign  will  not  be  con- 
sidered sufficient  ground  for  issue  of  attachment.  L.  1901,  Ch.  74. 

15.  Combinations  and  Monopolies. 

No  statutory  provision.  Late  decisions  have  upheld  such  agree- 
ments. Trenton  Potteries  Co.  v.  Olyphant,  58  N.  J.  Eq.  507  (1897); 
Meredith  v.  Co.,  55  N.  J.  Eq.  211  (1897);  56  N.  J.  Eq.  454  (1897); 
Ellerman  v.  Co.,  49  N.  J.  Eq.  217  (1891). 


NEW  MEXICO. 


1.  Corporation  Laws.* 

Acts  of  the  United  States  Congress.  Territorial  assemblies  shall 
not  grant  charters,  or  franchises  to  corporations  by  special  laws. 
Public  ownership  or  interest  in  private  corporations  prohibited.  Gen- 
eral laws  may  be  passed  for  the  formation  of  mining  and  industrial 
companies,  insurance,  banks  (except  of  issue),  trust  and  guarantee 
associations,  various  corporations  for  internal  improvements,  and 
eleemosynary  and  scientific  associations.  24  U.  S.  St.  at  L.,  p.  170, 
§§  1,  2,  5. 

Statutes.  Laws  of  1905,  Chapter  79,  contain  the  general  corpo- 
ration law  of  New  Mexico.  Under  this  law  resident  corporations 
may  be  organized  for  any  mining,  manufacturing  and  industrial 
purposes  and  for  other  pursuits  or  purposes  save  as  otherwise 
provided  for  by  special  laws.  Non-resident  corporations  may  be 
formed  for  any  lawful  purpose.  § 5. 

The  Act  of  1905  repeals  only  §§  411-456  of  the  Compiled  Laws 
of  1897  (§  134),  but  applies  as  far  as  may  be  to  corporations  formed 
under  special  laws  contained  in  said  Compiled  Laws.  §§  467-494. 

Banks,  insurance,  mining  and  railroad  corporations  have  special 
Titles  in  Compiled  Laws  of  1897.  An  insurance  department  is  created 
by  Ch.  5,  L.  1905,  and  irrigation  further  regulated  by  Ch.  102,  L.  1905. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  the  Territorial  Secretary:  For  filing 
certificate  of  incorporation,  10  cents  for  each  $1,000  of  authorized 
capital  stock;  minimum  fee,  $25.  § 119. 

Also  cost  of  publication.  § 135.  (See  under  § 3,  “ Filing  and 
Recording.”)  Recording  fee  to  County  Recorder,  10  cents  per  folio. 
Comp.  L.  1897,  § 780. 

Franchise  Tax.  No  annual  franchise  tax. 

Local  Taxation.  When  taxes  are  assessed  on  entire  corporate 
property,  stock  is  not  taxed  to  owners.  Comp.  Laws  1897,  § 4025. 
Statements  are  required  by  assessors  between  March  1st  and  May 
1st.  Penalty  for  failure  to  make  return  or  for  false  return  is  25  per 
cent,  added  to  tax.  Id.,  §§  4032-4036. 

* References,  except  as  otherwise  noted,  are  to  Chapter  79  of  Laws  of  1905. 

272 


NEW  MEXICO. 


273 


General.  To  Territorial  Secretary  for  filing  certificates:  On 
renewal  of  corporate  existence,  same  fees  as  on  original  incorpora- 
tion. On  increase  of  capital  stock,  or  on  increased  capital  stock  of  a 
consolidation,  10  cents  on  each  $1,000  of  increase;  minimum  fee, 
$20.  On  dissolution,  change  of  name  or  nature  of  business,  decrease 
of  stock,  change  in  par  value  or  number  of  shares,  or  other  amend- 
ments of  certificate  not  increasing  stock,  $20.  Change  of  principal 
office,  $5.  List  of  officers  and  directors,  $1.  All  other  certificates, 
$5.  § 1 19.  For  notice  to  file  annual  report,  $1.  § 48. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  No  residential  require- 
ments. § 5. 

Certificate  of  Incorporation.  Must  be  signed  and  acknowledged 
by  each  of  the  subscribers  named  therein,  in  person  or  by  their 
attorneys  in  fact,  and  must  set  forth  (§  7)  : 

(1)  Name  of  the  corporation.  No  name  must  be  assumed 
so  similar  to  that  of  existing  corporation  as  to  lead  to  con- 
fusion. Name  must  be  conspicuously  displayed  at  the  prin- 
cipal office  in  the  Territory.  § 51. 

(2)  Location  (town  or  city,  street  and  number,  if  any) 
of  principal  office  in  the  Territory. 

(3)  Object  or  objects  for  which  formed. 

(4)  Amount  of  capital  stock,  not  less  than  $3,000;  number 
of  shares  and  par  value  of  each.  Amount  of.  capital  stock 
with  which  to  commence  business,  not  less  than  $2,000.  If 
stock  is  classified,  a description  of  each  class  and  the  terms 
on  which  created. 

(5)  Names  and  post-office  addresses  of  the  incorporators, 
with  number  of  shares  subscribed  for  by  each;  the  aggregate 
of  such  subscriptions  to  be  the  amount  with  which  the  com- 
pany will  begin  business. 

(6)  Period,  if  any,  limited  for  the  duration  of  the  com- 
pany. May  be  fifty  years  and  be  extended  by  amendment 
for  similar  period.  §§  1,  30. 

(7)  Any  other  provisions  consistent  with  the  Act.  § 7. 

Directors  to  serve  first  three  months  may  be  named.  § 16. 
Power  to  make  by-laws,  but  only  subject  to  repeal  or  amendment 
by  stockholders,  may  be  delegated  to  the  directors.  § 10.  If  business 
is  to  be  conducted  outside  the  Territory,  this  must  be  included  in 
the  objects  set  forth.  § 6.  Stockholders’  liability  on  unpaid  sub- 
scriptions may  be  limited  by  executing  and  filing  a separate  certificate 
to  that  effect,  in  the  same  manner  as  the  certificate  of  incorpora- 
tion. § 23. 

Filing  and  Recording.  The  certificate  of  incorporation  must  be 
filed  with  the  Territorial  Secretary  and  a copy  certified  by  him 


274 


CLASSIFIED  CORPORATION  LAWS. 


recorded  with  the  recorder  of  the  county  in  which  the  principal  office 
in  the  Territory  is  established.  § 8.  The  certificate  of  incorporation, 
together  with  that  limiting  the  stockholders’  liability,  if  such  exists, 
is  also  published  in  some  newspaper  in  said  county,  and  proof  of 
publication  must  be  filed  with  the  Territorial  Secretary  within  twenty 
days  after  incorporation.  § 135. 

4.  Organization. 

First  Meetings.  If  the  directors  are  named  in  the  certificate  and 
the  power  to  make  by-laws  has  been  delegated  to  them,  the  usual 
first  meeting  of  stockholders  is  not  required.  § 16.  If  otherwise, 
the  meeting  must  be  called  by  a majority  of  the  incorporators  by 
notice  published  at  least  two  weeks  in  the  county  in  which  the  cor- 
poration is  established;  or  by  two  days’  personal  notice,  or  by  waiver 
signed  by  all  the  incorporators.  § 15.  But  any  vote  or  act  required 
of  the  stockholders,  if  unanimous,  is  valid  if  expressed  in  writing 
without  a meeting.  § 15.  Voting  by  proxy  is  allowed.  Id. 

By-Laws.  May  be  adopted  by  the  stockholders,  or  by  the 
directors  subject  to  control  of  the  stockholders,  if  so  provided  in  the 
certificate  of  incorporation.  § 10.  By-laws  may  prescribe  the  num- 
ber of  directors  and  provide  for  the  management  of  the  corporate 
property,  the  regulation  of  its  affairs,  and  the  transfer  of  stock;  also 
for  penalties  for  non-observance,  not  exceeding  $20  for  each 
offence.  § 1. 

Certificates.  Proof  of  publication  of  certificate  must  be  filed 
with  Territorial  Secretary  within  twenty  days  after  incorporation. 
§ 135.  Report  must  be  filed  within  thirty  days  after  first  annual  elec- 
tion. § 48.  (See  § 13,  “ Reports.”)  Certificates  of  payment  of  capital 
stock  must  be  filed  within  ten  days  after  each  payment.  § 27. 

5.  Corporate  Existence. 

When  Commenced.  Begins  on  filing  of  certificate  of  incorpora- 
tion with  Territorial  Secretary.  § 9.  Continues  for  fifty  years  (§  1) 
and  may  be  extended  for  another  term  of  fifty  years.  § 30.  Con- 
tinues after  dissolution  for  winding  up  of  corporate  affairs.  § 60. 

Beginning  Business.  May  be  commenced  when  $2,000  of  capital 
stock  has  been  paid  in.  §§  7,  27. 

Renewal.  May  be  had  by  regular  amendment.  § 30. 

Forfeiture  of  Charter.  Occurs  on  failure  to  bring  corporate 
books  into  the  Territory  on  order  of  the  court.  § 50.  For  failure 
to  comply  with  provisions  as  to  publication  of  certificate  of  incorpora- 
tion and  filing  of  proof  thereof,  right  to  do  business  in  the  Territory 
is  forfeited.  § 135. 

Dissolution.  May  be  effected  by  unanimous  written  consent  of 
stock  or  by  vote  of  two-thirds  of  the  stock  at  a special  meeting 
called  for  that  purpose.  § 35.  Such  action  or  consent  must  be  duly 
certified  to  the  Territorial  Secretary  and  the  certificate  of  dissolution 


NEW  MEXICO. 


275 


be  duly  published.  § 35.  The  incorporators  may  surrender  the 
charter  before  payment  of  any  part  of  the  capital  stock.  § 36. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 1. 

To  Hold  Property.  May  be  held  to  extent  of  corporate  require- 
ments, and  may  be  taken  in  payment  of  or  as  security  for  debts.  § I. 

Its  Own  Stock.  Shares  of  stock  held  by  the  corpora- 
tion may  not  be  voted  directly  or  indirectly.  § 43. 

Stock  of  Other  Corporations.  This  power  is  fully  con- 
ferred. §§  55,  58.  Public  improvement  corporations  may  accept 
stocks  and  bonds  for  labor  and  material.  § 57. 

To  Borrow  Money.  No  statutory  limitations.  Both  property 
and  franchises  may  be  mortgaged.  Bonds  may  be  converted  into 
common  stock  on  terms  stated  in  the  bonds.  § 19. 

To  Do  Business  in  Other  States.  Permitted  if  so  specified  in 
certificate  of  incorporation  (§  6),  but  an  office  and  agent  must  always 
be  maintained  in  the  Territory.  § 50. 

Consolidation  or  Merger.  Is  permitted  between  corporations 
engaged  in  business  of  a similar  nature.  §§  109-115. 

Amendment  of  Charter.  Omissions  or  errors  may  be  corrected 
by  filing  the  certificate  nunc  pro  tunc  before  any  part  of  the  capital 
stock  has  been  paid.  § 29.  Thereafter  the  charter  may  be  amended 
to  include  anything  which  might  have  been  secured  by  original 
articles,  by  two-thirds  vote  of  stock  cast  at  meeting  called — unless 
otherwise  provided  by  the  by-laws — on  twenty  days’  notice  given 
personally  or  by  mail.  A certificate  of  any  amendment,  signed  and 
acknowledged  by  the  president  and  secretary,  under  the  corporate 
seal,  together  with  the  written  assent  thereto  of  two-thirds  in  interest 
of  each  class  of  stock,  is  filed,  recorded  and  published  as  was  the 
original  certificate.  §§  30,  135. 


7.  Capital  Stock. 

Amount.  Must  be  not  less  than  $3,000.  § 7. 

Initial  Payment.  Must  be  at  least  $2,000.  § 7.  Certificate  of 

payments,  executed  by  the  president  and  secretary  or  treasurer,  must 
be  filed  with  the  Territorial  Secretary  within  ten  days  after  com- 
pleted payment,  stating  amount  paid,  whether  in  cash  or  property, 
also  total  amount  previously  paid  and  reported,  if  any.  § 27. 

Consideration  for  Issue.  May  be  money,  property  necessary  for 
the  business,  or  stock  of  other  corporations.  In  the  absence  of  fraud 
the  judgment  of  the  directors  as  to  value  of  property  so  taken  is 
conclusive.  In  all  statements  and  reports,  stock  so  issued  must  be 
reported  according  to  the  facts.  §§  54,  55. 

Assessments  may  be  made  in  the  discretion  of  the  directors  on 
thirty  days’  notice,  personally,  by  mail,  or  by  publication.  Shares 


2 76 


CLASSIFIED  CORPORATION  LAWS. 


may  be  sold  at  public  auction  for  delinquency  after  thirty  days’ 
default,  but  must  be  first  advertised  for  three  weeks  and  personal 
notice  be  given  the  stockholder.  §§  24-26. 

Increase  or  Decrease.  May  be  had  by  amendment;  but  no  de- 
crease of  stock  shall  release  from  liability  a stockholder  whose 
shares  are  not  fully  paid.  §§  30,  33.  Certificate  of  reduction  must 
be  published  three  weeks  commencing  fifteen  days  after  filing.  § 33. 

Classes  of  Stock.  May  be  created  in  certificate  of  incorporation 
(§  7),  or  by  amendment.  § 30.  Preferred  stock,  not  to  exceed  two- 
thirds  of  the  actual  paid  up  capital  stock,  may  be  made  redeemable 
at  not  less  than  par  at  a stated  time.  Dividends  on  preferred  stock 
must  not  exceed  ten  per  cent.,  but  they  may  be  cumulative.  § 18. 
Preferred  stock  may  be  converted  into  bonds  on  two-thirds  vote  of 
each  class  of  stock,  on  certain  conditions.  § 19. 

Par  Value  of  Shares.  Not  prescribed.  Must  be  stated  in  certifi- 
cate of  incorporation.  § 7. 

Stock  Certificates.  Must  be  signed  by  the  president  and  secre- 
tary and  certify  number  of  shares  owned.  § 20. 

Transfer  of  Stock.  Transfers,  whether  absolute  or  as  collateral, 
are  to  be  made  on  the  books  of  the  corporation  in  such  manner  and 
under  such  regulations  as  the  by-laws  may  provide.  § 21. 


8.  Stockholders. 

Rights  and  Powers.  By  two-thirds  vote  or  unanimous  written 
consent,  they  control  amendments  to  certificate  of  incorporation. 
§ 30.  Two-thirds  may  convert  preferred  stock,  paying  five  per  cent, 
dividend,  into  bonds  (§  19),  may  dissolve  corporation  (§  35),  or 
may  consolidate  with  other  corporations.  § no.  One-tenth  of  any 
class  of  stock  may  call  meeting  by  publishing  ten  days’  notice.  § 52. 
They  may  elect  officers  if  so  provided  in  by-laws.  § 12. 

Liability.  The  stockholders  are  at  most  liable  for  unpaid  sub- 
scriptions. § 22.  This  liability  may  be  avoided.  § 23.  (See  under 
“ Certificate  of  Incorporation.”)  Preferred  stockholders  are  never 
liable  for  corporate  debts.  § 18. 

Meetings.  Stockholders’  meetings  must  be  held  at  principal 
office  in  the  Territory.  § 50.  If  annual  election  is  not  held  on 
appointed  day  and  directors  do  not  call  special  election  within  reason- 
able time,  a justice  of  the  district  court  may  order  meeting  and 
punish  directors  for  contempt  on  failure  to  obey.  § 46.  Time  and 
management  of  meetings  and  voting  thereat  may  be  controlled  by 
certificate  of  incorporation.  § 17.  Inspectors  of  election  are  pro- 
vided for.  § 39. 

Notice.  Except  as  provided  by  statute  for  special  purposes,  no- 
tice of  meetings  may  be  prescribed  by  by-laws.  § 17.  Waiver  is 
provided  for.  § 15. 

Quorum.  Unless  otherwise  provided  in  charter,  a majority  of 
the  stock  is  a quorum  (§§  17,  38),  and  in  no  case  shall  more  than  a 
majority  be  required.  § 17. 


NEW  MEXICO. 


277 


Voting.  Cumulative  voting  may  be  provided  for  in  certificate 
of  incorporation  (§  40),  otherwise  each  stockholder  has  one  vote  for 
each  share.  § 41.  Stock  transferred  on  the  books,  of  the  corporation 
within  twenty  days  next  preceding  the  election,  must  not  be  voted. 

§ 41.  Voting  must  be  by  ballot  unless  otherwise  prescribed  by  the 
certificate  of  incorporation.  §§  17,  38.  The  transfer  book  controls 
as  to  right  to  vote.  § 45. 

Proxies.  Voting  by  proxy  is  permitted  (§§  17,  38,  41),  no  proxy 
to  be  voted  on  more  than  five  years  after  issue.  § 41. 

g.  Directors. 

Number.  Not  less  than  three;  may  be  classified,  no  class  to  be 
elected  for  a shorter  period  than  one  year  or  for  a longer  period  than 
five  years.  §11.  Directors  may  be  removed  by  petition  to  district 
court  for  irregularity  in  election  or  if  they  cease  to  be  stockholders. 
§§  44,  47- 

Qualifications.  Directors  must  be  stockholders.  §§  11,  44.  Num- 
ber of  shares  to  qualify  may  be  fixed  by  certificate  of  incorporation 
or  by-laws.  § 44.  If  a director  ceases  to  be  a stockholder,  he  may 
be  removed  by  the  district  court  on  application  of  person  aggrieved. 
§ 44.  One  director  must  be  a resident  of  the  Territory.  §11. 

Powers.  The  power  to  make  by-laws,  subject  to  amendment 
and  repeal  by  stockholders,  may  be  delegated  to  directors.  § 10. 
They  may  fill  vacancies  on  the  board,  unless  by-laws  provide  other- 
wise. § 14.  They  are  trustees  or*  dissolution  or  expiration.  §§  61-63. 

Liability.  Directors  are  held  liable  for  failure  to  publish  certifi- 
cate of  decrease  of  capital  stock  (§  33),  for  improper  dividends  or 
other  division  of  capital  stock  otherwise  than  prescribed  by  law; 
also  for  loans  to  stockholders.  To  escape  from  liability,  directors 
must  enter  their  dissent  on  corporate  records  within  two  weeks  and 
publish  the  same  in  newspaper  in  the  county  of  the  principal  ofiice. 
§§  34,  54-  An  officer  refusing  to  exhibit  books  or  list  of  stockholders 
forfeits  $200  for  each  offence,  one-half  of  which  goes  to  the  person 
suing;  directors  by  such  refusal  render  themselves  ineligible  for  office 
at  next  election.  § 37.  Officers  and  directors  are  also  ineligible  to 
office  on  failure  to  file  annual  report,  or  failure  to  attempt  such 
filing  within  thirty  days  after  demand  by  Territorial  Secretary.  § 48. 

Meetings.  May  be  held  outside  the  Territory.  § 50. 

Executive  Committee.  May  be  authorized  by  certificate  of  in- 
corporation or  by-laws.  § 11. 

10.  Officers. 

A president,  who  must  be  a director,  and  a secretary  and  treasu- 
rer are  prescribed.  The  secretary  must  be  sworn,  and  is  to  record 
votes  of  the  corporation  and  directors.  The  treasurer  must  give 
bond  as  required  by  the  by-laws.  § 12.  By-laws  may  provide  for 
any  other  officers  or  agents.  § 13.  There  must  be  a resident  agent. 
§§  49,  5°-  Officers  may  be  elected  by  stockholders  or  directors,  as 
provided  by  the  by-laws.  § 12. 


278 


CLASSIFIED  CORPORATION  LAWS. 


ii.  Principal  Office. 

An  office  must  always  be  maintained  in  the  Territory,  with  an 
agent  in  charge  thereof  on  whom  process  may  be  served.  § 49.  At 
this  office  the  name  of  the  corporation  must  be  conspicuously  dis- 
played. § 51.  Location  may  be  changed  by  amendment  (§  30),  or 
by  a two-thirds  vote  of  the  directors  duly  certified  and  filed.  § 32. 
For  removal  within  the  same  town,  precinct  or  city,  no  certificate 
is  required.  Id.  Office  and  agent  must  be  stated  in  every  certificate, 
report  or  statement  required  of  the  company.  § 49. 


12.  Corporate  Books. 

What  Required.  Transfer  books  and  Stock  book,  to  contain 
the  name  and  address  of  each  stockholder  and  number  of  shares  held 
by  each,  must  be  kept  at  principal  office  in  State.  § 37.  Secretary 
must  keep  record  of  votes  of  stockholders  and  directors.  §§  12,  52. 

Where  Kept.  If  the  corporation  is  duly  authorized  to  transact 
business  outside  the  Territory,  no  books  need  be  kept  within  the 
Territory  save  the  stock  and  transfer  books.  Duplicate  stock  and 
transfer  books  may  be  kept  without  the  Territory,  in  which  case 
transfers  of  stock  must  be  immediately  reported  to  the  resident 
agent.  §§  37,  50. 

Examination  of.  The  stock  and  transfer  books  must  be  open 
to  inspection  by  stockholders  and  those  authorized  to  see  them  during 
usual  hours  of  business  (§§  37,  50) ; but  no  one  may  inspect  the 
books  or  list  of  voters  for  any  purpose  not  connected  with  the  cor- 
porate business.  § 37.  List  of  stockholders  entitled  to  vote  must  be 
open  to  inspection  at  the  principal  office  in  the  Territory  at  least  ten 
days  before  each  election.  § 37. 


13.  Reports. 

Annual  Report.  Is  required  to  be  filed  within  thirty  days  after 
every  election,  authenticated  by  the  signatures  of  the  president  and 
any  other  officer  or  two  directors,  stating:  (1)  Name  of  the  cor- 

poration. (2)  Location  (town  or  city,  street  and  number,  if  any) 
of  registered  office  in  the  Territory,  and  name  of  agent  on  whom 
process  may  be  served.  (3)  Character  of  business.  (4)  Amount  of 
authorized  capital  stock  and  amount  actually  issued  and  outstanding. 
(5)  Names  and  addresses  of  officers  and  directors  and  when  terms 
expire.  (6)  Date  of  next  annual  meeting  of  stockholders  for  election 
of  directors  and  how  appointed.  A fine  of  $200  against  the^corpora- 
tion  is  provided  for  non-compliance,  with  other  penalties  against 
officers.  § 48. 

Publication  is  required  for  certificate  of  incorporation;  for 
all  amendments  or  supplements  thereof,  and  for  certificates  of  reduc- 
tion of  capital  stock  (§  33)  and  of  stockholders’  non-liability.  § 135. 
Also  for  dissolution,  assessments  and  sale  of  stock  for  non-payment 
of  same.  §§  26,  35.  Publication  of  notices  of  meetings  may  always 
be  avoided  by  personal  service  or  waiver.  §§  15,  35. 


NEW  MEXICO. 


279 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation,  ex- 
cept banking,  insurance  and  railroad  companies,  before  transacting 
business  in  the  Territory,  must  file  with  the  Territorial  Secretary 
an  authenticated  copy  of  its  charter  and  a statement  giving  its  author- 
ized capital  stock,  the  amount  thereof  actually  issued,  the  character 
of  business  it  is  to  transact,  and  designating  a principal  office  in  the 
Territory,  and  an  agent  to  receive  service  of  process,  with  place  of 
abode.  Such  agent  must  be  a domestic  corporation  or  natural  person 
of  full  age  actually  resident  in  the  Territory.  On  filing  such  papers, 
and  payment  of  same  fees  as  required  of  domestic  corporations 
(§  1 19),  the  Territorial  Secretary  issues  certificate  of  authority.  § 102. 

Same  publication  is  required  as  of  domestic  corporations  (§  135), 
with  penalty  for  neglect  of  twenty  days  of  -forfeiture  of  right  to  do 
business  in  the  Territory.  § 135. 

Penalties  for  Non-Compliance.  Inability  to  maintain  actions  in 
the  Territory  on  any  contracts  made  therein.  § 103.  On  failure  to 
appoint  and  maintain  agent,  service  of  all  process  and  notices  may 
be  made  on  Territorial  Secretary.  §§  49,  104.  There  is  a fine  of  $200 
for  transacting  business  in  the  Territory  without  compliance  with 
statute.  § 105. 

Taxation.  No  annual  license  tax.  Property  taxed  as  that  of 
domestic  companies. 

Books.  Same  as  for  domestic  corporations.  § 37. 

Reports.  Same  annual  report  is  required  as  of  domestic  corpo- 
rations. § 48. 

Attachments  Against.  Lie  against  foreign  corporation  which 
has  not  complied  with  the  law  authorizing  it  to  do  business  in  the 
Territory.  § 106. 

15.  Combinations  and  Monopolies. 

Combinations  in  restraint  of  trade  or  to  control  price  of  agri- 
cultural or  mining  products  or  manufactured  articles,  are  forbidden 
(C.  L.,  1897,  § 1292-1294),  with  penalties  of  fines,  $100  to  $1,000,  and 
imprisonment  not  exceeding  one  year.  All  such  contracts  declared 
void,  and  price  of  goods  not  recoverable  in  action  by  a concern  vio- 
lating the  statute. 


NEW  YORK. 


i.  Corporation  Laws.* 

Constitution.  “Corporations  may  be  formed  under  general  laws, 
but  shall  not  be  created  by  special  act,  except  for  municipal  purposes 
and  in  cases  where,  in  the  judgment  of  the  legislature,  the  objects  of 
the  corporation  can  not  be  attained  under  general  laws.”  Const.  1894, 
Art.  VIII,  § 1.  The  legislature  shall  not  pass  a private  or  local  bill 
“granting  to  any  private  corporation  any  exclusive  privilege,  immunity 
or  franchise  whatever.”  Art.  Ill,  § 18. 

Statutes.  Under  the  provisions  of  the  Business  Corporations 
Law  (Laws  of  1892,  Ch.  691  and  subsequent  amendments)  corporations 
may  be  formed  for  any  lawful  purpose  or  purposes,  other  than  a 
moneyed  corporation,  or  a corporation  provided  for  by  the  banking, 
the  insurance,  the  railroad  or  the  transportation  corporation  laws. 

Corporations  so  formed,  and  all  other  stock  corporations  are 
subject  to  the  provisions  of  the  Stock  Corporation  Law,  except  that 
Art.  I does  not  apply  to  moneyed  corporations.  (Laws  of  1892,  Ch. 
688  and  subsequent  amendments.) 

In  addition,  business  corporations,  and  all  other  corporations, 
whether  stock  or  non-stock,  unless  specifically  exempted,  are  subject 
to  the  provisions  of  the  General  Corporation  Law.  (Laws  of  1892, 
Ch.  687  and  subsequent  amendments.) 

Taxation  of  corporations  is  provided  for  by  the  Tax  Law.  (Laws 
of  1896,  Ch.  908  and  subsequent  amendments.) 

Banks,  trust  companies,  building  and  mutual  loan  associations, 
investment  and  safe  deposit  companies  and  similar  organizations  are 
formed  under  the  Banking  Law.  (L.  1892,  Ch.  689.) 

Insurance  companies  of  all  kinds  are  formed  under  the  Insurance 
Law.  (L.  1892,  Ch.  690.) 

Railway  companies  of  all  kinds  are  formed  under  the  Railroad 
Law.  (L.  1890,  Ch.  565,  as  amended  by  L.  1892,  Ch.  676.) 

Ferry,  navigation,  stage  coach,  tramway,  pipe-line,  gas  and  electric 
light,  water  works,  telegraph  and  telephone,  turnpike,  plank  road 
and  bridge  corporations  are  formed  under  the  Transportation  Cor- 
porations Law.  (L.  1890,  Ch.  566.) 

Religious  corporations  are  organized  under  the  Religious  Cor- 
porations Law  (L.  1895,  Ch.  723),  sundry  corporations  not  for  profits 
are  formed  under  the  Membership  Corporations  Law  (L.  1895,  Ch. 
559),  and  benevolent  corporations  and  orders,  under  the  Benevolent 
Orders  Law.  (L.  1896,  Ch.  377.) 

* In  the  general  references,  G.  C.  L.  refers  to  the  General  Corporation  Law, 
S.  C.  L.  refers  to  the  Stock  Corporation  Law,  and  B.  C.  L.  refers  to  the  Business 
Corporations  Law;  amendments  of  1905  included. 

280 


NEW  YORK. 

Enactments  of  1906. 


2.  Taxes  and  Fees. 

Franchise  Tax.  Section  182  of  the  Tax  Law  is  amended  and  now 
provides  that  the  franchise  tax  shall  be  computed  upon  the  amount  of 
capital  stock  employed  during  the  preceding  year  within  the  State, 
the  measure  of  the  amount  so  employed  to  be  such  portion  of  the 
issued  capital  stock  as  the  gross  assets  employed  in  any  business 
within  the  State  bear  to  the  gross  assets  wherever  employed  in  busi- 
ness, the  location  of  stock  held  in  another  corporation  to  be  that  of 
the  physical  property  represented  by  such  stock. 

Corporations  paying  dividends  of  6 per  centum  or  more  upon  the 
par  value  of  their  capital  stock  for  any  year  ending  with  the  31st  day 
of  October,  are  taxed  at  the  rate  of  one-quarter  of  a mill  on  each 
dollar  of  capital  employed  in  the  State  for  each  one  per  centum  of  the 
dividend  declared. 

Corporations  which  do  not  pay  dividends  of  6 per  cent,  or  more 
in  any  year  are  divided  for  purposes  of  taxation  into  two  classes: 

The  first  class  which  is  taxed  at  the  rate  of  three-fourths  of  one 
mill  on  each  dollar  of  capital  employed  in  the  State,  includes  the  fol- 
lowing corporations: 

(a)  Those  in  which  the  assets  do  not  exceed  the  liabilities  ex- 
clusive of  capital  stock,  (b)  Those  in  which  the  average  selling  price 
of  their  stock  for  the  preceding  year  is  below  its  par  value.  (c) 
Those  which  declared  no  dividend  during  the  preceding  year. 

The  second  class,  which  is  taxed  at  the  rate  of  one  and  one-half 
mills  on  each  dollar  of  capital  stock  employed  in  the  State,  includes 
the  following  corporations: 

(a)  Those  in  which  the  corporate  assets  exceed  the  liabilities 
(exclusive  of  capital  stock)  by  an  amount  equal  to  or  greater  than  the 
par  value,  of  the  capital  stock,  (b)  or  in  which  the  average  price  at 
which  the  corporate  stock  sold  during  the  preceding  year  was  equal 
to  or  greater  than  its  par  value,  provided,  however,  that  the  valuation 
of  the  stock  upon  which  this  tax  is  assessed  shall  in  either  of  these 
cases  be  not  less  than  the  par  value  of  the  stock,  nor  its  average  sell- 
ing price  for  the  preceding  year,  nor  the  difference  between  irts  assets 
and  liabilities,  exclusive  of  capital  stock. 

If  more  than  one  kind  of  stock  exists  and  the  rate  of  dividend  on 
the  different  kinds  varies,  the  tax  rate  for  each  class  is  fixed  separately 
according  to  the  foregoing  rules.  L.  1906,  Ch.  474,  p.  1196. 

General.  Section  180  of  the  Tax  Law  is  amended  by  the  addition 
of  a provision  that  if  the  stock  of  a corporation  be  decreased  and  then 
later  increased,  the  organization  tax  is  payable  only  on  the  excess,  if 
any,  of  the  increased  capital  stock  over  the  original  capitalization. 
L.  1906,  Ch.  524,  p.  1432. 

Stock  Transfer  Tax.  Amendments  to  the  law  regulating  the  tax 
on  transfers  of  stock  have  been  made  as  follows: 

Amendments  to  Section  215  of  the  Tax  Law  provides  that  the  tax 


NEW  YORK. 


shall  be  two  cents  on  each  share  of  $100  of  face  value  or  fraction 
thereof,  instead  of  “ on  each  hundred  dollars  of  face  value  or  frac- 
tion thereof.”  This  amendment  imposing  a tax  of  two  cents  on  every 
share  of  stock  transferred  regardless  of  its  face  value,  instead  of  two 
cents  on  each  one  hundred  dollars  of  face  value  as  before,  has  been 
declared  unconstitutional  in  People  ex  rel  Farrington  vs.  Mensching, 

187  N.  Y.  8 (1907). 

Amendments  to  the  same  section  also  provide  that  the  Comp- 
troller may  on  satisfactory  proof  that  stamps  in  payment  of  the  tax 
have  been  affixed  and  cancelled  erroneously,  refund  the  amount 
thereof. 

Amendments  to  section  317  extend  the  penalties  for  failure  to  pay 
the  tax,  to  transfers  whether  by  sale  or  otherwise,  to  all  deliveries  in 
pursuance  of  agreements,  or  to  deliveries  of  agreements  to  sell,  made 
without  the  proper  stamps  affixed  thereto. 

Amendments  to  Section  321  require  that  a true  record  of  all  sales, 
agreements  to  sell,  deliveries  or  transfers  of  shares  or  certificates  of 
stock  shall  be  kept  by  the  parties  making  same  with  the  date  thereof; 
also  that  such  records  shall  remain  accessible  for  the  Comptroller’s 
inspection  for  three  months  from  their  respective  dates.  L.  1906.  Ch. 
414,  p.  1008. 

5.  Corporate  Existence. 

Dissolution.  Sections  2423  and  2425  of  the  Code  of  Civil  Pro- 
cedure, relating  to  voluntary  dissolution,  are  amended  as  to  details  of 
procedure.  L.  1906,  Ch.  293,  p.  684. 

6.  Corporate  Powers. 

Amendment  of  Charter.  Section  2413  of  the  Code  of  Civil  Pro- 
cedure relating  to  change  of  corporate  name,  is  amended  as  to  details 
of  procedure.  L.  1906,  Ch.  89,  p.  173. 

7.  Capital  Stock. 

Increase  or  Decrease.  Under  the  amendments  to  Section  180  of 
the  Tax  Law,  if  a corporation’s  stock  is  decreased  and  then  increased, 
the  organization  tax  is  payable  only  on  the  excess,  if  any,  of  the 
increased  capital  stock  over  the  original  capitalization.  L.  1906,  Ch. 
524,  p.  1432. 

9.  Directors. 

Qualifications.  By  amendment  of  Section  20  of  the  Stock  Cor- 
poration Law,  policy  holders  of  an  insurance  corporation  are  made 
eligible  to  election  as  directors  whether  they  be  stockholders  or  no. 
L.  1906,  Ch.  238,  p.  469. 

Liability.  Section  41  is  added  to  the  General  Corporation  Law 
forbidding  political  contribution  from  corporations,  and  providing  that 
any  officer,  agent  or  person  who  solicits,  advises,  consents  to,  partici- 
pates in,  or  abets  such  contributions  in  any  way  is  guilty  of  a mis- 
demeanor, punishable  by  imprisonment  for  not  more  than  one  year 
and  by  a fine  of  not  more  than  one  thousand  dollars.  It  also  provides 
that  no  one  shall  be  excused  from  testifying  in  any  trial  for  violation 
of  the  provisions  of  this  section,  on  the  ground  that  such  testimony 


NEW  YORK. 


would  convict  him  of  a crime  or  subject  him  to  a penalty,  but  no  such 
evidence  shall  be  used  against  such  witness  in  any  legal  proceedings. 
L.  1906,  Ch.  239,  p.  470. 

Amendments  are  found  in  subdivisions  2 and  3 of  Section  61 1,  of 
the  Penal  Code,  providing  that  in  addition  to  the  previous  liabilities 
of  that  section  which  remain  unchanged,  a director,  officer,  agent  or 
employee  of  a corporation  who  makes  or  concurs  in  making  any  false 
entry  or  concurs  in  omitting  any  material  entry  in  its  books  or 
accounts,  or  who  knowingly  concurs  in  making  or  publishing 
any  reports  or  statements  of  its  affairs  or  pecuniary  condition,  con- 
taining any  material  statement  which  is  false,  or  omits  or  concurs  in 
omitting  any  statement  required  by  law  to  be  contained  therein,  is 
guilty  of  a misdemeanor.  L.  1906,  Ch.  286,  p.  595. 

13.  Reports. 

Comptroller’s  Report.  Section  190  of  the  Tax  Law  providing  for 
appraisal  of  the  capital  stock  of  corporations  by  the  corporate  officials, 
is  amended,  such  appraisal  now  being  required  when  dividends  are  less 
than  6 per  cent,  but  only  if  at  the  same  time  the  assets  exceed  the 
liabilities,  exclusive  of  capital  stock  by  an  amount  at  least  equal  to  the 
par  value  of  the  stock,  or  if  the  average  selling  price  of  the  stock  for 
the  year  is  not  less  than  its  par  value. 

In  either  of  these  cases  a sworn  appraisal  of  the  capital  stock 
must  be  made  between  November  first  and  fifteenth  by  the  president, 
secretary  or  treasurer  of  the  corporation  and  must  be  sent  in  with  the 
report  to  the  State  Comptroller.  Such  appraisal  value  must  not,  how- 
ever, be  less  than  the  average  selling  price  of  the  stock  for  the  year, 
nor  below  its  par  value,  nor  less  than  the  difference  between  the  assets 
and  liabilities,  exclusive  of  capital  stock.  L.  1906,  Ch.  474,  p.  1198. 

14.  Foreign  Corporations. 

Taxation.  Section  181  of  the  Tax  Law  is  amended  and  now  pro- 
vides that  the  measure  of  the  capital  stock  employed  by  a foreign  cor- 
poration in  the  State — upon  which  the  license  fee  of  one-eighth  of  one 
per  cent,  is  estimated — shall  be  such  proportion  of  the  issued  capital 
stock  as  the  gross  assets  employed  in  business  in  the  State  bear  to 
the  gross  assets  wherever  employed  in  business;  also  that  stock  held 
in  another  corporation  shall  be  deemed  to  be  assets  located  where  the 
physical  property  represented  by  such  stock  is  located.  L.  1906,  Ch. 
474,  p.  1196. 


NEW  YORK. 


28l 

The  above  laws  are  found  in  Birdseye’s  Rev.  Statutes,  3rd  and 
revised  edition. 


2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer,  one-twentieth  of 
one  per  cent.  (50  cents  for  each  $1,000)  upon  the  amount  of  capital 
stock  authorized  by  the  certificate  of  incorporation,  but  in  no  case 
less  than  $1.  Tax  Law,  § 180. 

To  Secretary  of  State:  Filing  fee,  $10;  recording  fee,  15  cents  for 
each  folio  (100  words).  For  copy  of  charter,  if  desired,  15  cents  per 
folio  and  $1  additional  for  certifying  same  under  the  Great  Seal. 

To  County  Clerk  for  filing  certified  or  duplicate  copy  of  charter, 
6 cents;  for  recording  same,  10  cents  per  folio.  Code  of  Civ.  Pro., 
§ 3304- 

Franchise  Tax.  An  annual  franchise  tax  is  imposed  and  is  com- 
puted upon  the  capital  stock  employed  in  the  State.  Tax  Law,  § 182. 
A corporation  carrying  on  its  entire  business  outside  the  State  is 
exempt  from  this  tax. 

Corporations  paying  not  less  than  6 per  cent,  annual  dividends  in 
any  year  are  taxed  for  that  year  at  the  rate  of  one-quarter  of  a mill 
for  each  one  per  cent,  of  dividend,  on  every  dollar  ~oL  capital  stock 
employed  in  the  State.  Id. 

Corporations  paying  a dividend  in  any  year  less  than  6 per  cent, 
are  taxed  for  that  year  at  the  rate  of  one  and  one-half  mills  upon 
such  portion  of  the  capital  stock  at  par  as  the  amount  oT  capital  em- 
ployed within  the  State  bears  to  the  entire  capital  of  the  corpor- 
ation. Id. 

Corporations  paying  nQ__dividend  in  any  year  are  for  that  year 
taxed  at  the  rate  of  one  and  one-half  mills  on  each  dollar  of  the 
appraised  value  of  the  capital  stock  employed  within  the  State.  Id. 

In  the  first  two  cases  the  value  of  the  capital  stock  does  not  enter 
in,  the  tax  being  computed  on  its  par  value.  The  amount  of  capital 
stock  employed  in  the  State,  and,  in  the  third  case,  its  value,  are  de- 
termined by  the  State  Comptroller  from  reports  submitted  by  the 
corporation  officials.  These  reports  are  submitted  between  the  1st 
and  15th  days  of  November  of  each  year  on  blanks  furnished  by  the 
Comptroller  and  cover  the  year  ending  the  31st  day  of  the  preceding 
October.  Tax  Law,  §§  189,  190.  (See  “Reports.”) 

Laundry  corporations,  manufacturing  corporations  to  the  extent 
only  of  the  capital  actually  employed  in  the  State  in  manufacturing, 
and  in  the  sale  of  the  products  of  such  manufacturing,  and  mining 
corporations,  wholly  engaged  in  mining  ores  within  the  State,  are 
exempt  from  payment  of  the  annual  franchise  tax  when  not  less  than 
forty  per  cent,  of  the  capital  stock  is  invested  and  used  within  the 
State  in  such  laundry,  manufacturing  or  mining  business.  Tax  Law, 

§ 183. 

Local  Taxation.  Real  estate  belonging  to  corporations  is  taxed 
in  the  district  in  which  it  lies  in  the  same  manner  as  the  real  estate 
of  individuals.  Tax  Law,  §11.  All  other  property,  after  deduction 
of  assessed  value  of  real  estate,  debts  of  the  corporation  and  non- 
taxable  property — including  any  surplus  or  reserve  up  to  an  amount 
equal  to  ten  per  centum  of  its  capital  (Tax  Law,  § 12) — is  taxed  at 


2 82 


CLASSIFIED  CORPORATION  LAWS. 


the  place  in  which  its  principal  office  is  situated.  Id.,  § II.  Such 
property  is  assessed  at  its  actual  value.  Id.,  § 12. 

General.  Fee  to  State  Treasurer  on  increase  of  capital  stock  is 
one-twentieth  of  one  per  centum  of  the  increased  amount,  but  in  no 
case  less  than  one  dollar.  Tax  Law,  § 180.  Filing  and  recording  fees 
for  charter  amendments,  same  as  for  original  certificate.  Fee  to 
Secretary  of  State  for  recording  certificate  of  payment  of  capital  stock 
or  other  instruments,  15  cents  for  each  100  words.  L.  1892,  Ch.  683. 

A transfer  tax  of  2 cents  on  each  $100  or  fraction  thereof  is  im- 
posed upon  all  sales,  or  agreements  or  memoranda  of  sales  or  deliv- 
eries, or  transfer  of  shares  or  certificates  of  stock  in  any  domestic  or 
foreign  corporation,  made  after  June  1,  1905.  Payment  of  such  tax 
is  to  be  denoted  by  an  adhesive  stamp,  affixed  to  the  certificate  or 
other  evidence  of  transfer,  or  placed  upon  the  books  of  the  com- 
pany if  the  sale  or  transfer  is  only  evidenced  by  the  books.  The 
person  affixing  any  such  stamp  shall  write  or  stamp  thereon  the 
initials  of  his  name  and  the  date  of  affixing  and  shall  cut  or  perforate 
the  same  in  a substantial  manner  so  that  it  can  not  be  again  used. 
No  transfer  of  stock  upon  which  such  tax  is  not  paid  at  the  time  of 
transfer  shall  be  made  the  basis  of  any  action  or  legal  proceeding 
nor  shall  proof  thereof  be  offered  or  received  in  evidence  in  any 
court  of  the  State.  L.  1905,  Ch.  241.  Failure  to  pay  tax,  or  to  cancel 
stamps  when  affixed,  is  a misdemeanor,  punishable  by  fine  and  im- 
prisonment, also  by  additional  civil  penalty  of  $500  for  each  viola- 
tion. Id.  The  State  Comptroller  holds  that  this  tax  must  be  paid  on 
an  original  issue  of  stock. 

3.  Incorporation. 

Incorporators.  May  be  any  number  not  less  than  three,  must 
be  natural  persons  of  full  age,  at  least  two-thirds  of  them  must  be 
citizens  of  the  United  States  and  at  least  one  must  be  a resident  of 
the  State.  G.  C.  L.,  § 4.  B.  C.  L.,  § 2. 

Certificate  of  Incorporation.  This  is  usually  prepared  in  tripli- 
cate,— two  copies  for  filing  as  required  by  statute  (See  “Filing  and 
Recording”),  and  one  copy  to  be  retained  by  the  corporation.  Each 
of  these  copies  should  be  duly  signed  by  the  incorporators  and  the 
two  filing  copies  must  in  addition  be  acknowledged  by  the  incor- 
porators before  a notary  public  or  other  official  authorized  to  take 
acknowledgments  to  deeds.  The  certificate  must  be  in  the  English 
language  (G.  C.  L.,  § 5)  and  contain  (B.  C.  L.,  § 2): 

(1)  Name  of  the  proposed  corporation,  which  must  not 
be  the  same  as  that  of  any  other  corporation  authorized  to 
do  business  in  the  State,  or  so  nearly  similar  as  to  be  cal- 
culated to  deceive.  Nor  must  it  contain  the  word  trust,  bank, 
banking,  insurance,  assurance,  indemnity,  guarantee,  guaranty, 
savings,  investment,  loan  or  benefit.  G.  C.  L.,  § 6. 

(2)  Purpose  or  purposes  for  which  it  is  to  be  formed, 
which  may  be  any  lawful  business  allowable  under  the  Busi- 
ness Corporations  Law.  (See  “Corporation  Laws.”) 


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283 


(3)  Amount  of  capital  stock,  and  if  any  portion  be  pre- 
ferred stock,  the  preferences  thereof.  Different  classes  of 
preferred  stock  are  expressly  allowed.  S.  C.  L.,  § 47. 

(4)  Number  of  shares  of  which  the  capital  stock  shall 
consist,  each  of  which  shall  not  be  less  than  five  nor  more 
than  one  hundred  dollars,  and  the  amount  of  capital,  not  less 
than  five  hundred  dollars,  with  which  the  corporation  will 
begin  business. 

(5)  City,  village  or  town  in  which  its  principal  business 
office  is  to  be  located,  and,  if  in  the  City  of  New  York,  the 
borough  therein  in  which  it  is  to  be  located. 

(6)  Duration,  which  may  be  any  number  of  years  or  may 
be  perpetual  if  so  stated. 

(7)  Number  of  its  directors,  not  less  than  three. 

(8)  Names  and  post-office  addresses  of  the  directors  for 
the  first  year,  one  of  whom  at  least  must  be  a resident  of 
the  State  (G.  C.  L.,  § 29),  and  all  of  whom  must  be  stock- 
holders unless  otherwise  provided  in  the  charter  or  stock- 
holders’ by-laws.  S.  C.  L.,  § 20. 

(9)  Names  and  addresses  of  the  subscribers  to  the  certifi- 
cate and  a statement  of  the  number  of  shares  of  stock  which 
each  agrees  to  take  in  the  corporation. 

(10)  Any  other  provisions  for  the  regulation  of  the  busi- 
ness and  the  conduct  of  the  affairs  of  the  corporation  and 
any  limitation  upon  its  powers  and  upon  the  powers  of  its 
directors  and  stockholders  which  does  not  exempt  them  from 
any  obligation  or  from  the  performance  of  any  duty  imposed 
by  law.  B.  C.  L,  § 2;  G.  C.  L.,  § 10. 

The  statute  last  quoted  gives  broad  scope  for  the  regulation  of 
the  corporate  affairs  by  charter  provisions.  In  addition,  the  follow- 
ing general  charter  provisions  are  specifically  authorized:  To  hold 
and  dispose  of  the  stocks  and  bonds  of  other  corporations  (S.  C.  L., 
§ 40);  to  issue  partly  paid  stock  (S.  C.  L.,  § 62);  cumulative  voting  in 
elections  of  directors,  and  limitations  upon  the  voting  right  (G.  C.  L., 
§ 20) ; waiver  of  the  statute  requirement  that  directors  must  be  stock- 
holders (S.  C.  L.,  § 20);  creating  one  or  more  classes  of  preferred 
stock  (S.  C.  L.,  § 47);  classification  of  directors  (S.  C.  L.,  § 20);  requir- 
ing the  consent  of  more  than  two-thirds  in  interest  of  the  stock- 
holders to  extend  the  corporate  existence.  G.  C.  L.,  § 32  (as  amended 
by  L.  1905,  Ch.  256).  If  directors’  meetings  are  to  be  held  only  within 
the  State,  the  certificate  or  by-laws  must  so  provide.  B.  C.  L.,  § 2. 

Filing  and  Recording.  State.  The  duly  executed  certificate  of 
incorporation  is  sent  to  the  Secretary  of  State,  together  with  filing 
fee  of  $10  and  recording  fee  of  15  cents  for  each  100  words  of  its 
subject  matter.  G.  C.  L.,  § 5;  L.  1892,  Ch.  683. 

At  the  same  time  the  organization  tax  of  one-twentieth  of  one 
per  cent,  on  the  total  authorized  capital  must  be  sent  to  the  State 
Treasurer  who  notifies  the  Secretary  of  State  that  such  tax  has  been 
received.  If  the  certificate  of  incorporation  is  in  due  and  acceptable 


284 


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form  this  latter  official  notifies  the  State  Treasurer  that  such  is  the 
case  and  files  and  records  the  instrument.  He  then  sends  official 
notice  of  the  receipt  and  filing  of  the  certificate  to  the  party  from 
whom  it  was  received,  and  the  State  Treasurer  also  sends  his  receipt 
for  the  organization  tax.  The  Secretary  of  State  can  not  file  the 
certificate  until  the  organization  tax  has  been  paid  and  he  has  been 
formally  notified  thereof.  Tax  Law,  § 180. 

Remittance  to  either  official  may  be  by  check,  money  order  or 
other  convenient  method.  Checks  sent  in  payment  of  organization 
tax  must,  by  rule  of  the  Treasurer’s  office,  be  certified. 

Filing  and  Recording.  Local.  As  soon  as  the  Secretary  of  State’s 
notification  of  filing  and  the  Treasurer’s  receipt  for  organization  tax 
are  received,  the  duplicate  original — signed  and  acknowledged  exactly 
as  was  the  original  and  with  the  receipt  for  organization  tax  from 
the  State  Treasurer  attached — must  be  filed  in  the  office  of  the  County 
Clerk  in  the  place  where  the  corporation  has  its  principal  office. 
G.  C.  L.,  § 5.  Filing  fee,  6 cents.  Recording  fee,  10  cents  for  each 
100  words  contained  in  the  instrument.  Code  Civ.  Pro.,  § 3304.  The 
County  Clerk  is  not  permitted  to  file  the  certificate  unless  it  is  accom- 
panied by  the  Treasurer’s  receipt  for  organization  tax.  Tax  Law, 
§ 180. 

If  for  any  reason  desirable,  a copy  of  the  original  charter,  certified 
by  the  Secretary  of  State,  may  be  filed  in  the  office  of  the  County 
Clerk  instead  of  a duplicate  original.  G.  C.  L.,  § 5.  The  duplicate 
original  is,  however,  usually  more  convenient  and  less  expensive. 

4.  Organization. 

First  Meetings.  As  the  directors  for  the  first  year  are  named  by 
the  charter  (B.  C.  L.,  § 2)  and  have  power  to  adopt  by-laws,  subject 
to  those  of  the  stockholders  (G.  C.  L.,  § 29),  the  first  meeting  of  stock- 
holders loses  much  of  its  importance  and  is  sometimes  omitted 
entirely.  Usually,  however,  it  is  held,  being  assembled  by  call  and 
waiver,  or  by  publication  of  notice  thereof,  at  least  once  in  each  week 
for  two  successive  weeks  immediately  preceding  such  meeting,  in  a 
local  newspaper.  G.  C.  L.,  § 39;  S.  C.  L.,  § 20.  At  this  meeting  by- 
laws are  adopted,  and,  if  the  stock  of  the  corporation  is  to  be  issued 
in  whole  or  in  part  for  property,  such  exchange  is  approved  by  formal 
resolution.  Meeting  must  be  held  within  the  State.  Stockholders 
may  be  represented  by  proxy.  G.  C.  L.,  §§  20,  21. 

The  first  meeting  of  directors  is  usually  assembled  by  means  of 
call  and  waiver,  otherwise  by  any  method  prescribed  by  the  by-laws 
for  calling  special  meetings  of  the  board.  Unless  otherwise  provided 
by  charter  or  by-laws  it  may  be  held  without  the  State.  B.  C.  L.,  § 2. 
At  this  meeting  the  directors  elect  officers;  adopt  any  necessary  by- 
laws in  harmony  with  those  adopted  by  the  stockholders,  direct  any 
exchange  of  stock  for  property  by  formal  resolution,  and  authorize 
the  officers  to  effect  the  same  and  take  any  other  steps  that  may  be 
necessary  to  start  the  business  of  the  new  company. 

The  use  of  “dummy”  incorporators  and  directors  is  allowable 
and  common. 

By-Laws.  By-laws  for  the  management  of  the  property  of  the 
corporation,  the  regulation  of  its  affairs,  the  transfer  of  its  stock 


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285 


and  the  calling  of  meetings  for  its  members,  may  be  adopted  by 
stockholders,  and,  subject  to  the  by-laws  adopted  by  the  stockholders, 
also  by  the  directors.  G.  C.  L.,  §§  11,  29.  Such  by-laws  may  fix  the 
amount  of  stock  necessary  to  constitute  a quorum.  By-laws  duly 
adopted  by  the  stockholders  shall  control  the  action  of  directors.  By- 
laws adopted  by  the  directors  regulating  the  election  of  directors  or 
officers,  shall  not  be  valid  unless  published  once  a week  for  two 
successive  weeks,  and  at  least  thirty  days  before  such  election,  in  a 
local  newspaper.  G.  C.  L.,  §11.  The  time  and  place  of  electing  direc- 
tors should  be  fixed  by  the  by-laws  (S.  C.  L.,  § 20),  as  also  the  man- 
ner of  appointing  inspectors  of  election.  Id.,  § 28.  The  manner  of 
transferring  stock  should  be  prescribed  by  the  by-laws.  Id.,  § 40. 

Certificates.  None  are  required  to  show  completed  organization, 
but  within  one  year  from  incorporation  at  least  one-half  the  capital 
stock  must  be  paid  in  and  a certificate  thereof,  signed  and  acknowl- 
edged by  a majority  of  the  directors  and  verified  by  the  president  or 
vice-president  and  the  secretary  or  treasurer,  must  be  made  and  filed 
in  the  offices  where  certificates  of  incorporation  are  filed.  Failure  to 
make  payment  of  one-half  capital  stock  within  the  statutory  limits 
renders  the  corporation  liable  to  dissolution  on  procedure  therefor. 
B.  C.  L.,  § 5.  No  penalty  for  failure  to  file  certificate  of  payment. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  of  certificate  of  incorporation  in 
the  office  of  Secretary  of  State,  provided  all  fees  have  been  paid. 
May  be  perpetual  if  so  expressed  in  the  charter  or  for  a term  of 
years.  B.  C.  L.,  § 2. 

Beginning  Business.  May  not  be  commenced  until  the  amount 
of  capital — which  may  not  be  less  than  $500 — mentioned  in  the  charter 
as  the  amount  with  which  the  corporation  will  commence  business, 
has  been  paid  in  money  or  property  (B.  C.  L.,  § 3),  but  must  be  begun 
within  two  years  from  the  date  of  organization.  G.  C.  L.,  § 31. 

Renewal.  May  be  effected  at  any  time  before  expiration  of  the 
charter  period  by  consent  of  two-thirds  in  interest  of  the  stock- 
holders either  expressed  in  writing  or  by  vote  at  a special  meeting 
called  upon  the  same  notice  as  that  prescribed  for  the  annual  meet- 
ing, the  certificate  of  such  consent,  under  the  corporate  seal,  to  be 
subscribed  and  acknowledged  by  the  president  or  a vice-president  and 
the  secretary  or  an  assistant  secretary  and  filed  as  was  the  original 
certificate  of  incorporation,  such  extension  to  be  also  noted  on  the 
margin  of  the  records  of  the  original  certificate.  G.  C.  L.,  § 32.  A 
majority  of  more  than  two-thirds  in  interest  of  the  stockholders  may 
be  required  for  extension  of  corporate  existence  if  so  provided  in  the 
charter.  G.  C.  L.,  § 32  (as  amended  by  L.  1905,  Ch.  256).  After  ex- 
piration of  the  charter  period  a corporation  having  outstanding  bonds 
unmatured  and  unpaid  may  be  revived  by  due  application  to  the 
Supreme  Court  for  a period  not  exceeding  the  original  period. 

Id.,  § 32. 

Forfeiture  of  Charter.  Is  prescribed  for  failure  to  begin  business 
within  two  years  from  the  date  of  organization  (G.  C.  L.,  § 31),  for 


286 


CLASSIFIED  CORPORATION  LAWS. 


failure  to  make  payment  of  one-half  of  capital  stock  in  one  year  from 
date  of  organization  (B.  C.  L.,  § 5),  and  for  intentional  failure  to  pay 
franchise  taxes  one  year  after  notification  thereof.  Tax  Law,  § 200. 
Any  such  forfeiture  of  charter  is  only  after  due  and  formal  procedure. 

Dissolution.  Before  any  part  of  the  capital  stock  has  been  paid, 
dissolution  may  be  effected  by  means  of  a certificate  signed  by  the 
incorporators  setting  forth  the  fact,  stating  that  there  are  no  liabilities 
and  surrendering  all  corporate  rights  and  franchises.  S.  C.  L.,  § 61. 

Thereafter  voluntary  dissolution  may  be  effected  by  vote  of  two- 
thirds  in  interest  of  the  stockholders  taken  in  pursuance  of  and  in 
connection  with  detailed  formalities  prescribed  by  the  statute  (S.  C.  L., 
§ 5 7),  or  by  petition  of  a majority  of  the  directors  to  the  Supreme 
Court.  Code  Civ.  Pro.,  §§  2419-2429. 


6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  G.  C.  L.,  §11. 

To  Hold  Property.  Authority  is  given  to  acquire  by  grant,  gift, 
purchase,  devise  or  bequest,  to  hold  and  to  dispose  of  such  property 
as  the  purposes  of  the  corporation  shall  require,  subject  to  such  limi- 
tations as  may  be  prescribed  by  law.  G.  C.  L.,  §11.  Also  power  to 
acquire  and  dispose  of  such  property  as  shall  be  requisite  for  the 
convenient  transaction  of  business  in  other  states.  G.  C.  L.,  § 14. 
Power  to  acquire  property  is  also  given  in  the  Stock  Corporation  Law, 
§ 42. 

Its  Own  Stock.  A corporation  may  take  its  own  stock 
in  payment  for  debts  which  the  directors  may  deem  bad  or  doubt- 
ful. S.  C.  L.,  § 23.  When  stock  is  issued  for  property  it  is  a customary 
practice  for  a portion  of  the  stock  so  issued  to  be  returned  to  the 
corporation  to  be  used  for  its  purposes. 

Stock  of  Other  Corporations.  This  power  is  given  by 
statute  as  to  stock  of  similar  or  related  corporations  and  may  be  se- 
cured as  to  other  corporations  by  proper  charter  provision.  S.  C.  L., 

§ 40. 

When  one  corporation  holds  stock  in  another,  its  directors  and 
officers  are  eligible  as  directors  in  the  other  corporation  as  if  they 
were  individually  stockholders  therein.  S.  C.  L.,  § 40. 

To  Borrow  Money.  Every  stock  corporation  shall  have  the 
power  to  borrow  money  and  contract  debts,  when  necessary  for  the 
transaction  of  its  business,  or  for  the  exercise  of  its  corporate  rights, 
privileges  or  franchises,  or  for  any  other  lawful  purpose  of  its  incor- 
poration. S.  C.  L.,  § 2. 

Mortgages,  except  purchase  money  mortgages,  must  be  authorized 
by  two-thirds  in  interest  of  the  stockholders  of  the  corporation,  such 
consent  to  be  in  writing  or  by  vote  at  a special  meeting  called  for 
the  purpose  by  the  same  notice  as  for  annual  meetings.  Such  con- 
sent must  be  certified  under  the  corporate  seal,  be  subscribed  and 
acknowledged  by  the  president  or  a vice-president  and  by  the  secre- 
tary or  an  assistant  secretary  and  be  filed  and  recorded  in  the  office 
of  the  clerk  or  register  of  the  county  in  which  the  corporation  has 
its  principal  place  of  business.  Id.,  § 2. 


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287 


Bonds  issued -in  pursuance  of  such  authority  may  contain  a pro- 
vision that  they  shall  be  convertible  into  stock  of  the  corporation  not 
less  than  two  nor  more  than  twelve  years  from  the  date  of  the 
mortgage.  S.  C.  L.,  § 2.  Shall  only  be  issued  for  money,  labor  done 
or  property  actually  received  for  the  use  and  lawful  purposes  of  the 
corporation.  S.  C.  L.,  § 42.  Judgment  of  directors  as  to  value  of 
property  shall,  however,  in  the  absence  of  fraud,  be  conclusive.  Id., 
§ 42.  Bonds  of  other  similar  corporations  may  be  guaranteed.  S.  C. 
L.,  § 40. 

To  Do  Business  in  Other  States.  This  is  given  by  implication  in 
the  Business  Corporations  Law  (§  2)  which  provides  that  if  meetings 
of  the  directors  are  to  be  held  only  within  the  State  it  must  be  so 
provided  in  the  certificate  of  incorporation;  also  in  the  General  Cor- 
poration Law  (§  14)  providing  for  the  acquisition  of  property  by 
corporations  transacting  business  in  other  states.  This  power  is 
usually  provided  for  explicitly  in  the  certificate  of  incorporation. 

Consolidation  or  Merger.  Any  two  or  more  corporations  or- 
ganized for  the  purpose  of  carrying  on  any  kind  of  a business  of  the 
same  or  of  a similar  nature  which  a corporation  organized  under  the 
Business  Corporations  Law  might  carry  on,  may  consolidate  such 
corporations  into  a single  corporation.  B.  C.  L.,  § 8.  Detailed  direc- 
tions for  such  consolidation  are  given.  Id.,  §§  8-12. 

Any  corporation  lawfully  owning  all  the  stock  of  any  other  cor- 
poration organized  for,  or  engaged  in  business  similar  or  incidental  to 
that  of  the  possessor  corporation,  may  merge  said  other  corporation 
and  become  possessed  of  all  its  property,  rights,  privileges  and  fran- 
chises, but  without  prejudice  to  any  liabilities  of  such  other  corpor- 
ation or  to  the  rights  of  any  creditors  thereof.  S.  C.  L.,  § 58. 

Amendment  of  Charter.  Informalities  or  obvious  defects  in  the 
certificate  of  incorporation  may  be  corrected  by  an  amended  certifi- 
cate made  and  filed  by  the  incorporators  or  the  directors  of  the 
corporation.  Also  the  Supreme  Court  may  on  cause  shown,  and 
with  notice  to  the  Attorney  General  and  upon  the  terms  and  condi- 
tions imposed  by  the  court,  amend  any  certificate  of  incorporation 
so  as  to  truly  set  forth  the  objects  and  purposes  of  the  corporation. 

G.  C.  L„  § 7. 

Amendments  may  also  be  had  to  include  any  purposes,  powers 
or  provisions  allowable  to  corporations  of  the  same  general  character 
by  execution  of  an  amended  certificate  by  the  president  and  secretary, 
pursuant  to  vote  of  a majority  of  the  directors  and  to  vote  of  three- 
fifths  in  interest  of  the  capital  stock.  S.  C.  L.,  § 32  (as  amended  by 
L.  1905,  Ch.  751). 

Corporate  name  may  be  changed  on  resolution  of  directors,  by 
petition  to  Supreme  Court.  Code  of  Civil  Procedure,  §§  2411-2417. 
Number  of  directors  may  be  changed  by  action  of  a majority  in 
interest  of  the  stockholders,  or  by  unanimous  consent  of  all  the  stock- 
holders without  a meeting.  S.  C.  L.,  § 21.  Capital  stock  may  be 
increased  or  reduced  by  action  of  a majority  in  interest  of  the  stock- 
holders expressed  at  a meeting  duly  called  for  the  purpose,  or  by 
unanimous  consent  of  the  stockholders  expressed  in  writing.  S.  C.  L., 
§§  44,  45,  46.  Number  of  shares  may  be  increased  or  decreased  by 
two-thirds  vote  of  all  the  stock.  S.  C.  L.,  § 56.  Change  of  principal 
office  and  place  of  business  may  be  effected  by  unanimous  written 


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consent  of  all  the  stockholders  or  by  vote  of  the  stockholders  at  a 
special  meeting.  S.  C.  L.,  § 59. 

All  amendments  of  the  certificate  of  incorporation  must  be  filed 
in  the  same  offices  as  the  original  certificate. 

7.  Capital  Stock. 

Amount.  Must  not  be  less  than  $500.  B.  C.  L.,  § 2. 

Initial  Payment.  The  amount  of  capital  with  which  the  corpor- 
ation begins  business  must  not  be  less  than  $500  (B.  C.  L.,  § 2),  and 
this  amount  must  be  paid  in  full  in  money  or  property  before  the 
corporation  may  begin  business.  B.  C.  L.,  § 3.  One-half  the  total 
capital  stock  must  be  paid  in  within  one  year  of  incorporation. 
B.  C.  L.,  § 5.  (See  “Reports.”) 

Consideration  for  Issue.  No  corporation  shall  issue  either  stock 
or  bonds  except  for  money,  labor  done  or  property  actually  received 
for  the  use  and  lawful  purposes  of  such  corporation.  Any  corpor- 
ation may  purchase  any  property  authorized  by  its  certificate  of  incor- 
poration, or  necessary  for  the  use  and  lawful  purposes  of  such  cor- 
poration, and  may  issue  stock  to  the  amount  of  the  value  thereof  in 
payment  therefor,  and  the  stock  so  issued  shall  be  full  paid  stock 
and  not  liable  for  any  further  payment  under  any  of  the  provisions 
of  the  Stock  Corporation  Law;  and  in  the  absence  of  fraud  in  the 
transaction,  the  judgment  of  the  directors  as  to  the  value  of  the 
property  purchased  shall  be  conclusive.  S.  C.  L.,  § 42. 

Increase  or  Decrease.  The  capital  stock  may  be  increased  or  de- 
creased, not  below  the  minimum  prescribed  by  law  ($500,  B.  C.  L.,  § 2), 
either  without  a meeting  by  unanimous  consent  of  the  stockholders 
expressed  in  writing  and  signed  by  all  the  stockholders  in  person  or 
by  proxy,  or  by  vote  of  a majority  in  interest  of  the  stockholders 
cast  at  a meeting  specially  called  for  that  purpose.  Notice  of  such 
meeting  stating  the  time,  place,  object  and  the  amount  of  increase 
or  reduction  proposed,  signed  by  the  president  or  a vice-president  and 
the  secretary,  must  be  published  once  a week  for  at  least  two  suc- 
cessive weeks  in  a local  newspaper,  and  a copy  of  such  notice  be 
mailed  to  each  stockholder  at  least  two  weeks  before  the  meeting, 
or  be  served  on  him  personally  at  least  five  days  before  the  meet- 
ing. The  chairman  and  secretary  must  be  chosen  from  the  stock- 
holders. A certificate  of  the  proceedings  at  such  meeting  showing 
a compliance  with  the  requirements  of  the  law,  the  amount  of  capital 
theretofore  authorized,  the  proportion  issued,  the  amount  of  the  in- 
creased or  decreased  capital  stock,  and,  if  the  latter,  the  whole  amount 
of  the  ascertained  debts  of  the  corporation,  shall  be  made,  signed, 
verified  and  acknowledged  by  the  chairman  and  secretary  of  the 
meeting  and  be  filed  in  the  same  office  as  the  original  certificate  of 
incorporation.  If  the  increase  or  decrease  has  been  authorized  by 
unanimous  consent,  a certificate  of  such  consent  must  be  verified  and 
filed  as  before.  In  no  case  shall  the  capital  stock  be  reduced  below 
the  corporate  debts  and  liabilities,  and  no  existing  liabilities  of  stock- 
holders shall  be  relieved  thereby,  and  the  certificate  of  decrease  shall 
bear  upon  it  the  approval  of  the  State  Comptroller.  S.  C.  L.,  §§  45,  46. 

When  any  such  certificate  has  been  filed  the  amount  of  capital 


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stock  shall  be  increased  or  reduced  as  the  case  may  be  to  the  amount 
therein  specified.  S.  C.  L.,  § 46.  The  proceedings  of  the  meeting  at 
which  any  change  of  capital  stock  was  authorized,  or  a copy  of  the 
consent  by  which  such  change  was  effected  shall  appear  upon  the 
minute  book  of  the  corporation.  Id.,  § 46.  Fees  on  any  increase  of 
capital  stock,  one-twentieth  of  one  per  cent,  of  the  increase,  but  not 
less  than  one  dollar.  Tax  Law,  § 180. 

Classes  of  Stock.  Corporations  may  issue  common  and  preferred 
stock  and  different  classes  of  preferred  stock,  if  the  certificate  of 
incorporation  so  provides,  or  by  the  consent  of  holders  of  record  of 
two-thirds  of  the  capital  stock,  given  at  a meeting  called  for  that 
purpose  upon  notice  such  as  is  required  for  the  annual  meeting,  a 
certificate  of  the  proceedings  thereat  to  be  signed  and  sworn  to  by 
the  president  and  a vice-president  and  the  secretary  or  an  assistant 
secretary  and  duly  filed  and  recorded  in  the  offices  where  the  original 
certificate  of  incorporation  was  filed.  S.  C.  L.,  § 4 7.  When  authorized 
by  the  charter,  the  preferences  of  stock  must  be  set  forth  therein. 
B.  C.  L.,  § 2. 

Par  Value  of  Shares.  May  not  be  less  than  $5  nor  more  than 
$100.  B.  C.  L.,  § 2.  Number  of  shares  may  be  increased  or  decreased 
without  change  of  authorized  capital — thereby  changing  the  par  value 
of  shares — by  two-thirds  vote  of  all  the  stock.  S.  C.  L.,  § 56. 

Stock  Certificates.  The  stock  of  every  stock  corporation  shall  be 
represented  by  certificates  prepared  by  the  directors  and  signed  by 
the  president  or  vice-president  and  secretary  or  treasurer  and  sealed 
with  the  seal  of  the  corporation.  S.  C.  L.,  § 40. 

If  a certificate  is  lost  or  destroyed  and  the  corporation  refuses 
to  issue  a new  certificate  in  place  thereof,  application  for  such  re-issue 
may  be  made  to  the  Supreme  Court  at  the  residence  of  the  stock- 
holder or  at  the  location  of  the  corporation.  S.  C.  L.,  §§  50,  51. 

Transfer  of  Stock.  A transfer  of  stock  is  not  valid  as  against  the 
corporation,  its  stockholders  and  creditors,  except  to  convey  the  lia- 
bilities of  a stockholder,  until  entered  in  the  stock  book  (See  “Cor- 
porate Books”)  by  an  entry  showing  from  and  to  whom  transferred. 
S.  C.  L.,  § 29.  As  between  the  buyer  and  seller  the  transaction  is, 
however,  complete  as  soon  as  the  certificate  is  duly  assigned. 

8.  Stockholders. 

Rights  and  Powers.  Unless  otherwise  provided  in  the  certificate 
of  incorporation,  stockholders  of  record  shall  be  entitled  at  every 
meeting  of  the  corporation  to  one  vote  for  every  share  of  stock 
standing  in  their  names  on  the  books  of  the  corporation.  G.  C.  L., 
§ 20.  By  a by-law  adopted  by  vote  at  any  annual  meeting,  or  at  any 
special  meeting  duly  called  for  such  purpose,  they  may  prescribe  a 
period,  not  exceeding  forty  days,  prior  to  meetings  of  the  stock- 
holders, during  which  no  transfers  of  stock  on  the  books  of  the  cor- 
poration may  be  made.  Id.,  § 20.  May  form  voting  trusts  for  terms 
not  exceeding  five  years.  Id.,  § 20.  May  call  for  the  stock  books  at 
any  stockholders’  meeting.  Id.,  § 20.  May  vote  by  proxy.  Id., 
§§  20,  21. 


290 


CLASSIFIED  CORPORATION  LAWS. 


Stockholders  have  power  to  make  by-laws  which  shall  control 
the  action  of  directors  and  by  which  the  amount  of  stock  necessary 
to  constitute  a quorum,  except  for  annual  meeting,  may  be  fixed. 
G.  C.  L.,  § ii.  May  designate  by  by-law,  the  number  of  directors — 
not  less  than  one-third  the  whole  number — necessary  to  constitute  a 
quorum.  G.  C.  L.,  § 29.  May  inspect  stock  books.  S.  C.  L.,  § 29. 
May  require  financial  statements  from  treasurer.  S.  C.  L.,  § 52.  All 
amendments  to  charter,  except  correction  of  obvious  defects  or  omis- 
sions, and  change  of  name,  must  be  authorized  by  the  stockholders. 
Also  the  following  corporate  actions  must  be  authorized  by  the  stock- 
holders before  they  may  be  undertaken:  Mortgage  of  corporate 

property,  except  for  purchase  money  (S.  C.  L.,  § 2),  guarantee  of 
bonds  of  other  similar  corporations  (S.  C.  L.,  § 40),  sale  of  entire 
property  to  similar  corporation  (S.  C.  L.,  § 33),  consolidation  of  cor- 
poration (B.  C.  L.,  §§  8,  9),  extension  of  corporate  existence  (G.  C.  L., 
§ 32),  dissolution  (S.  C.  L.,  § 57). 

Liability.  Every  holder  of  capital  stock  not  fully  paid  is  per- 
sonally liable  to  creditors  of  the  corporation  to  an  amount  equal,  to 
the  amount  unpaid  on  the  stock  held  by  him  (S.  C.  L.,  § 54),  but  no 
such  liability  is  enforceable  until  judgment  has  been  recovered  against 
the  corporation  and  execution  thereon  has  been  returned  unsatisfied 
in  whole  or  in  part,  and  no  stockholder  shall  be  personally  liable  for 
any  corporate  debt  not  payable  within  two  years  from  the  time  it  is 
contracted,  nor  unless  action  is  brought  within  two  years  after  the 
debt  becomes  due,  nor  may  any  action  be  brought  against  a stock- 
holder after  he  ceases  to  be  a stockholder  unless  brought  within  two 
years  from  the  time  he  shall  have  ceased  to  be  a stockholder.  S.  C.  L., 
§ 55.  The  liability  on  unpaid  stock  is  not  relieved  by  a decrease  of 
capital  stock,  as  to  debts  existing  prior  to  such  decrease.  S.  C.  L., 
§ 44- 

Stockholders  of  a corporation  are  jointly  and  severally  personally 
liable  for  all  debts  due  and  owing  to  any  of  its  laborers,  servants  or 
employees  for  services  rendered  the  corporation,  but  notice  of  the 
intention  to  enforce  such  liability  must  be  given  by  the  employee 
in  writing  within  thirty  days  after  the  termination  of  his  services  to 
the  corporation.  S.  C.  L.,  § 54. 

Meetings.  No  statute  exists  permitting  stockholders  to  meet 
outside  the  State  and  in  the  absence  of  any  such  enabling  act,  their 
meetings  must  be  held  within  the  State.  Elections  of  directors  are 
to  be  held  at  the  time  and  place  fixed  by  the  by-laws  (S.  C.  L.,  § 20) 
though  special  elections  of  directors  must  be  held  at  the  principal 
office  of  the  corporation.  G.  C.  L.,  § 25. 

Notice.  Of  the  time  and  place  of  holding  any  election  of  direc- 
tors, or  annual  meeting,  shall  be  given  by  publication  thereof,  at 
least  once  in  each  week  for  two  successive  weeks  immediately  pre- 
ceding such  election,  in  a newspaper  published  in  the  county  where 
such  election  is  to  be  held,  and  in  such  other  manner  as  may  be  pre- 
scribed in  the  by-laws.  S.  C.  L.,  § 20. 

Other  meetings,  except  when  otherwise  required  by  law  or  the 
by-laws  of  the  corporation,  are  to  be  called  in  the  same  manner  as 
the  annual  meeting.  G.  C.  L.,  § 39. 

The  most  important  of  the  meetings,  notice  for  which  is  pre- 
scribed by  the  statutes,  are  as  follows:  On  the  same  notice  as  that 

required  for  the  annual  meetings  of  the  corporation;  to  mortgage 


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291 


corporate  property  (S.  C.  L.,  § 2) ; to  sell  entire  property  to  another 
corporation  (S.  C.  L.,  § 33);  to  create  ^ preferred  stock  (S.  C.  L., 
§ 47);  to  extend  corporate  existence  (G.  C.  L.,  § 32).  On  prescribed 
notice  other  than  for  annual  meeting;  postponed  election  of  directors 
(G.  C.  L.,  § 24),  increase  or  decrease  of  capital  stock  (S.  C.  L.,  § 45), 
change  of  number  of  directors  (S.  C.  L.,  § 21),  to  alter  certificate  of 
incorporation  (S.  C.  L.,  § 32),  to  dissolve  corporation  (S.  C.  L.,  § 57), 
guarantee  of  bonds  of  another  corporation  (S.  C.  L.,  § 40). 

Any  meeting  may,  however,  be  held  without  notice,  if  such  action 
be  authorized  or  approved,  and  the  requirements  thereof  be  waived 
in  writing  by  every  stockholder  either  in  person  or  by  attorney. 
G.  C.  L,  § 38. 

Quorum.  At  stockholders’  meetings  may  be  fixed  by  the  by-laws 
(G.  C.  L.,  § 11),  except  for  elections  of  directors  (G.  C.  L.,  § 26) 
(S.  C.  L.,  § 20)  where  the  stockholders  in  attendance  constitute  a 
quorum  without  regard  to  the  amount  of  stock  represented. 

Voting.  Stockholders  of  record  are  entitled  to  one  vote  for  every 
share  of  stock  held  unless  otherwise  provided  by  the  certificate  of 
incorporation.  G.  C.  L.,  § 20.  Stockholders  may  vote  in  person  or 
by  proxy.  Id.,  §§  20,  21.  Proxies  must  be  in  writing  and  be  executed 
by  the  stockholder  himself  or  his  duly  authorized  attorney.  Id.,  § 21. 
No  proxy  valid  after  eleven  months  from  the  time  of  its  execution 
unless  some  longer  limited  period  be  specified  in  the  proxy.  Id.,  § 21. 
Every  proxy  shall  be  revocable  at  pleasure.  Id.,  § 21.  The  pledgee 
of  stock  holding  such  stock  in  his  own  name  shall,  except  in  cases 
of  express  trust,  or  written  agreement  to  the  contrary,  issue  a proxy 
to  the  actual  owner.  Id.,  § 20.  No  stockholder  shall  sell  his  vote  or 
issue  a proxy  to  any  person  for  any  sum  of  money  or  anything  of 
value.  Id.,  § 20. 

Cumulative  voting  may  be  had  by  proper  charter  provision. 
G.  C.  L.,  § 20.  The  stock  book  is  evidence  of  the  rights  of  stock- 
holders to  vote  (Id.,  § 20),  but  in  the  absence  of  the  stock  book  this 
right  may  be  established  for  special  elections  of  directors  by  oath 
of  the  parties  claiming  the  right.  G.  C.  L.,  § 26. 

Inspectors  of  Election.  Shall  be  appointed  in  the  manner  pre- 
scribed by  the  by-laws.  S.  C.  L.,  § 28.  Directors  and  officers  in  a 

monied  corporation  are  not  eligible.  Id.,  § 28.  Their  number  is  not 
prescribed  but  as  they  are  invariably  referred  to  in  the  statutes  in  the 
plural,  should  be  at  least  two  in  number.  Inspectors  for  the  first 

annual  meeting  and  any  previous  election  of  directors  held  by  the 

stockholders  are  to  be  appointed  by  the  board  of  directors  named  in 
the  charter.  Id.,  § 28.  Any  inspector  absent  or  refusing  to  act  at 
any  election  may  be  replaced  by  the  meeting.  Id.,  § 28.  Inspectors 
must  be  sworn  and  are  entitled  to  a reasonable  compensation  for  their 
services.  Id.,  § 28.  Their  oaths  duly  subscribed  must  be  immediately 
filed,  together  with  a certificate  of  the  result  of  the  election,  in  the 
office  of  the  Clerk  of  the  County  in  which  the  election  is  held.  Id., 
§ 28.  Inspectors  violating  their  oaths  are  guilty  of  misdemeanor. 
Penal  Code,  § 613.  Inspectors  may  challenge  voters.  G.  C.  L.,  § 22. 

Voting  Trusts.  Are  authorized  by  the  General  Corporation  Law 
as  follows:  A stockholder  may,  by  agreement  in  writing,  transfer 

his  stock  to  any  person  or  persons  for  the  purpose  of  vesting  in  him 
or  them  the  right  to  vote  thereon  for  a time  not. exceeding  five  years 
upon  terms  and  conditions  stated.  Any  such  agreement  must  be  open 
to  the  participation  of  every  other  stockholder  of  the  corporation, 


292 


CLASSIFIED  CORPORATION  LAWS. 


if  desired,  and  a duplicate  of  every  such  agreement  must  be  filed  in 
the  principal  office  of  the  corporation  and  be  open  to  the  inspection 
of  every  stockholder  during  business  hours.  G.  C.  L.,  § 20.  The 
stock  of  the  members  entering  the  trust  must  be  surrendered  and  re- 
issued in  the  names  of  the  trustees,  and  the  fact  that  these  latter  are 
trustees  must  appear  both  on  such  certificates  and  on  the  books  of 
the  corporation.  Id.,  § 20. 


9.  Directors. 

General.  At  least  one-fourth  in  number  of  the  directors  shall 
be  elected  annually.  S.  C.  L.,  § 20.  This  provision  permits  the 
classification  of  directors  into  not  more  than  four  classes,  the  mem- 
bers of  one  class  to  be  elected  each  year.  Vacancies  in  the  board 
shall  be  filled  in  the  manner  prescribed  in  the  by-laws.  Id.,  § 20. 
On  dissolution  the  directors  are  trustees — unless  other  trustees  are 
appointed  by  competent  authority — with  full  power  to  settle  the  affairs 
of  the  corporation.  G.  C.  L.,  § 30.  If  directors  are  not  elected  on 
the  day  designated  in  the  by-laws,  every  director  shall  continue  to 
hold  office  and  discharge  his  duties  until  his  successor  has  been 
elected.  G.  C.  L.,  § 23.  If  election  of  directors  is  not  held  on  the 
day  designated  in  the  by-laws,  the  directors  shall  forthwith  call  a 
special  meeting  of  the  stockholders  for  the  purpose.  Id.,  § 24.  If 
directors  fail  to  call  such  meeting,  any  stockholder  may  do  so  on 
prescribed  notice.  Id.,  § 24.  For  details  of  such  special  meetings,  see 
General  Corporation  Law,  §§  24-26. 

Number.  Not  less  than  three.  B.  C.  L.,  § 2.  No  maximum  num- 
ber prescribed.  May  be  changed  within  the  limits  of  the  law  by  a 
majority  vote  of  the  stockholders  cast  at  a meeting  held  on  two  weeks’ 
notice  in  writing  at  the  usual  place  of  meeting  of  the  directors. 
S.  C.  L.,  § 21.  Number  may  also  be  changed  without  a meeting  by 
unanimous  consent  of  all  the  stockholders.  Full  details  of  procedure 
are  prescribed  by  the  statute.  S.  C.  L.,  § 21.  If  number  of  directors 
is  increased,  the  additional  directors  shall  be  elected  by  a majority 
vote  of  the  directors  then  in  office.  If  the  board  is  classified,  the  terms 
of  the  classes  expiring  at  different  times,  the  new  directors  shall  be 
apportioned  among  these  classes  so  as  to  preserve  as  nearly  as  may 
be  the  same  relative  proportion.  S.  C.  L.,  § 21  (amendment  of  1905). 

Qualifications.  Directors  must  be  stockholders  unless  this  re- 
quirement is  waived  by  the  charter  or  in  a stockholders’  by-law.  S.  C. 
L.,  § 20.  At  least  one  director  must  be  a resident  of  the  State.  G.  C. 
L.,  § 29. 

Powers.  The  affairs  .of  every  corporation  shall  be  managed  by 
a board  of  directors.  G.  C.  L.,  § 29.  Directors  may  make  by-laws  sub- 
ject to  those  adopted  by  the  stockholders.  G.  C.  L.,  §§  11,  29.  Any 
desired  limitation-  upon  the  powers  of  the  directors,  if  legally  per- 
missible, may  be  inserted  in  the  certificate  of  incorporation.  B.  C.  L., 
§ 2;  G.  C.  L.,  § 10.  Directors  may  appoint  officers  with  such  powers 
and  duties  in  the  affairs  of  the  corporation  as  may  be  given  them 
by  the  board  or  the  by-laws.  S.  C.  L.,  § 27.  May  require  security 
from  officers.  Id.,  § 27.  May  remove  them  at  pleasure.  Id.,  § 27. 
They  may  elect  new  directors  on  increase  of  number.  L.  1905,  Ch.  750. 


NEW  YORK. 


293 


Liability.  Directors  are  jointly  and  individually  liable  to  the  cor- 
poration and  its  creditors  for  making  unauthorized  dividends;  or  for 
withdrawing,  or  in  any  way  paying  to  the  stockholders,  or  any  of 
them,  any  part  of  the  capital;  or  for  reducing  the  capital  stock  in 
an}'  unauthorized  way,  the  loss  sustained  by  any  such  unlawful  action 
being  the  measure  of  their  liability.  S.  C.  L.,  § 23.  Such  action  is 
also  a misdemeanor  under  the  Penal  Code,  § 594.  But  any  director 
absent  from  the  meeting  where  such  unlawful  action  was  taken,  or,  if 
present,  causing  his  dissent  from  such  action  to  be  entered  on  the 
minutes  at  large,  is  not  liable  therefor.  S.  C.  L.,  § 23. 

Directors  and  officers  are  jointly  and  severally,  personally  liable 
for  making  loans  to  stockholders,  for  discounting  any  note  or  other 
evidence  of  debt  for  stockholders,  or  for  receiving  the  same  for  any 
payment,  in  whole  or  in  part,  due  or  to  become  due  on  any  stock  in 
the  corporation,  or  for  receiving  or  discounting  any  note  or  other 
evidence  of  debt  to  enable  any  stockholder  to  withdraw  any  part  of 
the  money  paid  in  by  him  on  his  stock.  S.  C.  L.,  § 25.  The  directors 
and  officers  involved  shall  “jointly  and  severally,  be  personally  liable 
to  the  extent  of  such  loan  and  interest,  for  all  debts  of  the  corporation 
contracted  before  payment  of  the  sum  loaned,  and  to  the  full  amount 
of  the  notes  or  other  evidences  of  debt  so  received  or  discounted, 
with  interest  from  the  time  such  liability  accrued.”  S.  C.  L.,  § 25. 
Such  unlawful  action  is  also  a misdemeanor  under  the  Penal  Code, 
§ 594- 

Directors  and  officers  making  transfers  of  the  corporate  property 
to  officers,  directors  or  stockholders,  to  avoid  payment  of  debt,  or  in 
anticipation  of  insolvency,  or  in  event  of  insolvency  with  intent  to 
prefer  or  defraud  creditors,  shall  be  personally  liable  to  the  stock- 
holders and  creditors  of  the  corporation  to  the  full  extent  of  any 
loss  sustained.  S.  C.  L.,  § 48. 

Directors  and  officers  are  also  jointly  and  severally,  personally 
liable  for  any  reports  or  public  notices  made  by  them  which  shall 
be  false  in  any  material  respect,  to  the  amount  of  damage  sustained 
by  stockholders  or  creditors  acting  upon  the  faith  thereof.  Action 
must  be  brought  within  two  years  from  the  time  any  such  report  was 
made.  S.  C.  L.,  § 31.  Directors  and  officers  making  or  concurring 
in  such  false  reports  are  guilty  of  a misdemeanor.  Penal  Code,  § 61 1. 

Any  directors  or  officers  having  custody  or  control  of  the  stock 
books  of  the  corporation,  wilfully  neglecting  or  refusing  to  make 
any  proper  entry  as  required  by  law,  or  refusing  inspection  thereof 
to  any  person  entitled  by  law  to  inspect  the  same,  are  guilty  of  a 
misdemeanor.  Penal  Code,  § 61 1. 

A director  is  deemed  to  have  such  knowledge  of  the  corporate 
affairs  as  to  enable  him  to  determine  whether  any  act.  proceeding  or 
omission  of  the  board  to  which  he  belongs,  is  in  violation  of  the 
provisions  of  the  Penal  Code  relating  to  directors,  and,  if  in  viola- 
tion thereof,  he  must,  if  present,  to  escape  liability  therefor,  cause, 
or  in  writing  require  his  dissent  to  be  entered  on  the  minutes  of  the 
directors.  Or.  if  absent  from  the  particular  meeting,  he  will  neverthe- 
less be  held  liable  for  any  violations  of  the  Penal  Code  occurring 
thereat — if  they  appear  upon  the  minutes — unless  he  ceases  to  be  a 
director  within  six  months  thereafter,  or,  otherwise,  causes,  or  re- 
quires in  writing  his  dissent  to  be  entered  on  the  minutes  within  that 
period.  Penal  Code,  § 614. 

Officers  neglecting  or  refusing  to  make  annual  report  within  ten 
days  after  written  'request  by  a creditor  or  stockholder  shall  forfeit 


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CLASSIFIED  CORPORATION  LAWS. 


to  the  people  the  sum  of  fifty  dollars  for  every  day  they  shall  so 
refuse  or  neglect.  S.  C.  L.,  § 30. 

Meetings.  Directors’  meetings  may  be  held  within  or  without 
the  State  unless  expressly  restricted  to  the  State  by  charter  or  by-law 
provision.  B.  C.  L.,  § 2.  There  are  no  statutory  requirements  as  to 
place  of  meeting. 

Quorum.  May  be  fixed  by  by-laws  adopted  by  the  stockholders, 
at  any  number  not  less  than  one-third  of  the  total  membership  of 
the  board.  G.  C.  L.,  § 29.  If  not  otherwise  provided,  a majority  of 
the  membership  is  required  to  constitute  a quorum.  Id.,  § 29.  When 
a quorum  is  present  a majority  of  those  present  may  act  and  such 
action  is  the  action  of  the  board.  Id.,  § 29. 

Executive  Committee.  There  is  no  statutory  authority  for  the 
appointment  of  an  executive  or  other  standing  committee.  The 
appointment  of  such  committees  is,  however,  general,  and  there  is  no 
doubt  that  the  board  may  delegate  its  authority  to  properly  consti- 
tuted standing  committees.  Sheridan  El.  L.  Co.  v.  The  Chatham 
National  Bank,  127  N.  Y.  517  (1891);  Olcott  v.  Tioga  Railroad  Co., 
27  N.  Y.  546  (1863). 

10.  Officers. 

A president,  who  must  also  be  a director,  a secretary,  treasurer, 
and  other  officers,  agents  and  employees  may  be  appointed  by  the 
board  of  directors.  S.  C.  L.,  § 27.  Have  such  powers  and  duties  as 
are  prescribed  by  the  directors  or  the  by-laws.  Id.,  § 27.  May  be 
removed  by  the  board  at  pleasure.  Id.,  § 27.  Board  may  require 
security  from  them.  Id.,  § 27.  (For  liabilities  of  officers,  see  “Lia- 
bility” under  heading  “Directors.”)  Names  and  addresses  are  to  be 
included  in  annual  report. 

11.  Principal  Office. 

The  name  of  the  city,  village  or  town  in  which  the  principal 
office  is  to  be  located  must  be  given  in  the  certificate  of  incorporation. 
If  in  the  City  of  New  York,  the  borough  in  which  it  is  located  must 
also  be  given.  B.  C.  L.,  § 2.  Its  location  may  be  changed  at  any 
time.  S.  C.  L.,  § 59.  (See  “Amendments.”)  Personal  property  of 
the  corporation  is  assessed  in  the  tax  district  where  the  principal  office 
is  located.  Tax  Law,  § 11.  Special  elections  of  directors  must  be 
held  in  principal  office.  G.  C.  L.,  § 25.  Stock  book  and  books  of 
account  must  be  kept  in  the  principal  office.  S.  C.  L.,  § 29.  The 
term  “office  of  a corporation”  as  used  in  the  statutes  means  its  prin- 
cipal office  in  the  State.  G.  C.  L.,  § 3. 

12.  Corporate  Books. 

Books  Required.  Every  stock  corporation  shall  keep  at  its  office 
correct  books ' of  account  , of  all  its  business  and  transactions,  and  a 
book  to  be  known  as  the  stock  book,  containing  the  names,  alpha- 
betically arranged,  of  all  persons  who  are  stockholders  of  the  cor- 


NEW  YORK. 


295 


poration,  showing  their  places  of  residence,  the  number  of  shares  of 
stock  held  by  them  respectively,  the  time  when  they  respectively 
became  the  owners  thereof,  and  the  amount  paid  thereon.  S.  C.  L., 
§ 29.  Xo  transfer  of  stock  shall  be  valid  as  against  the  corporation, 
its  stockholders  and  creditors  for  any  purpose,  except  to  render  the 
transferee  liable  as  a stockholder  for  the  debts  of  the  corporation, 
until  it  shall  have  been  entered  in  the  stock  book  by  an  entry  show- 
ing from  and  to  whom  transferred.  Id.,  § 29.  The  stock  book  is 
evidence  as  to  who  is  entitled  to  vote  at  elections  of  directors. 
G.  C.  L.,  § 20. 

Where  Kept.  In  principal  office  in  the  State.  S.  C.  L.,  § 29. 

Examination  of.  The  stock  book  shall  be  open  daily,  during  at 
least  three  business  hours  for  the  inspection  of  the  stockholders  and 
judgment  creditors,  who  may  make  extracts  therefrom.  S.  C.  L.,  § 29. 
Xo  statutory  provisions  as  to  examination  of  books  of  account. 


13.  Reports. 

Annual  Report.  Every  corporation  must  during  the  month  of 
January  make  a report  as  of  the  first  day  of  January,  stating:  (1)  The 
amount  of  its  capital  stock,  and  the  proportion  actually  issued.  (2) 
The  amount  of  its  debts  or  an  amount  which  they  do  not  exceed. 
(3)  The  amount  of  its  assets  or  an  amount  which  its  assets  at  least 
equal.  (4)  The  names  and  addresses  of  all  the  directors  and  officers 
of  the  company.  Foreign  corporations  must  also  include  the  name 
of  their  resident  agent  as  appointed  under  the  provisions  of  the  Code. 
(See  ‘“Foreign  Corporations.”)  Corporations  doing  business  outside 
the  United  States  are  allowed  until  May  1st  to  make  report. 

This  report  is  to  be  made  by  the  president  or  a vice-president 
or  the  treasurer  or  a secretary  of  the  corporation  and  be  filed  in  the 
office  of  the  Secretary  of  State.  S.  C.  F.,  § 30  (amended  by  F.  1905, 
Ch.  415).  Xo  penalty  is  prescribed  for  failure  to  file  this  report 
unless  such  filing  is  requested  by  a creditor  or  stockholder  of  the 
corporation.  -In  such  event  the  report  must  be  filed  within  ten  days 
under  penalty  of  fifty  dollars  for  each  day  thereafter  that  such  neglect 
or  refusal  shall  continue.  Id.,  § 30.  The  annual  report  is  not  usually 
filed  unless  so  requested. 

Comptroller’s  Report.  On  or  before.  Xovember  15th  of  each  year 
a written  report  must  be  made  to  the  State  Comptroller,  showing  the 
condition  of  the  corporation  at  the  close  of  business  on  October  31st 
preceding,  stating  the  amount  of  its  authorized  capital  stock,  the 
amount  of  stock  paid  in,  the  date  and  rate  per  centum  of  each  divi- 
dend declared  by  it  during  the  year  ending  with  such  day,  the  entire 
amount  of  the  capital  of  such  corporation,  and  the  capital  employed 
by  it  in  the  State  during  such  year.  Tax  Law,  § 189.  This  report 
is  made  on  blanks  furnished  by  the  Comptroller  and  is  the  basis  for 
determination  of  the  franchise  tax.  (See  “Franchise  Tax.”)  In  case 
no  dividends,  or  dividends  of  less  than  six  per  cent,  have  been  de- 
clared, this  report  must  be  accompanied  by  an  estimate  or  appraisal, 
made  by  the  treasurer  or  secretarj%  of  the  actual  cash  value  of  the 
capital  stock,  not  less,  however,  than  the  average  selling  price  for 
the  year.  Tax  Law,  § 190.  Comptroller  may  require  additional  and 


296 


CLASSIFIED  CORPORATION  LAWS. 


special  reports.  Tax  Law,  § 191.  Reports  must  have  annexed  thereto 
affidavit  of  president  or  vice-president,  secretary  or  treasurer,  to  the 
effect  that  the  statements  contained  are  true.  Id. 

General.  Local  reports  for  taxation  are  made  in  accordance  with 
local  requirements. 

Certificates  of  the  result  of  elections  of  directors  must  be  made 
by  the  inspectors  of  election,  and,  accompanied  by  their  duly  sub- 
scribed oaths,  must  be  filed  forthwith  in  the  office  of  the  clerk  of  the 
county  in  which  the  election  was  held.  S.  C.  L.,  § 28. 

Certificate  of  payment  of  one-half  of  capital  stock  must  be  filed 
in  the  same  offices  as  the  certificate  of  incorporation  within  thirty 
days  after  payment  thereof.  Such  payment  must  be  made  within  one 
year  from  the  date  of  incorporation.  Penalty  for  non-payment  may 
be  dissolution  of  corporation.  B.  C.  L.,  § 5.  No  penalty  is  provided 
for  failure  to  file  report. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  A sworn  copy,  in  the  English 
language,  of  the  charter,  or  certificate  of  incorporation,  is  to  be  filed 
in  the  office  of  the  Secretary  of  State.  Also  a statement  under  the 
corporate  seal  particularly  setting  forth  the  business  or  objects  of 
the  corporation  which  it  is  engaged  in  carrying  on  or  which  it  pro- 
poses to  carry  on  within  the  State,  and  a place  within  the  State  which 
is  to  be  its  principal  place  of  business,  and  designating  a person,  who 
must  have  an  office  or  place  of  business  at  the  same  place,  upon 
whom  process  against  the  corporation  may  be  served  within  the 
State.  Such  statement  must  be  signed  by  the  president,  vice- 
president  or  other  acting  head  of  the  corporation,  must  be  acknowl- 
edged, and  must  be  accompanied  by  the  written  consent  of  the  person 
designated  as  the  representative  of  the  corporation.  G.  C.  L.,  § 16; 
Code  of  Civil  Procedure,  § 432.  Filing  fee,  $10. 

If  the  papers  filed  as  above  are  in  due  form  and  are  as  to 
powers,  purposes  and  general  subject  matter  such  as  may  be  accepted, 
the  Secretary  of  State  issues  a certificate  of  authority  and  the  cor- 
poration is  then  authorized  to  conduct  its  business  within  the  State. 
Fee  for  certificate  of  authority,  $1.00.  A certificate  will  not  be  issued 
to  a corporation  having  a name  the  same,  or  similar  to  that  of  an 
existing  domestic  corporation,  or  having  a name  not  allowed  to  a 
domestic  corporation.  G.  C.  L.,  § 15. 

Penalties  for  Non-Compliance.  No  action  on  contracts  may  be 
maintained.  G.  C.  L.,  § 15. 

Taxation.  Foreign  corporations  must  pay  a license  fee  based 
upon  the  amount  of  capital  employed  in  the  State,  the  rate  being  one- 
eighth  of  one  per  cent.  If  receipt  for  franchise  fee  for  first  year  is 
not  obtained  within  thirteen  months  from  time  of  beginning  business 
within  the  State,  the  corporation  may  not  maintain  any  action  or 
have  any  recovery  in  the  State  Courts.  Tax  Law,  § 181.  An  annual 
franchise  tax  must  be  paid  by  foreign  corporations.  This  is  the  same 
as  for  domestic  corporations.  Id.,  § 182. 

Books.  A stock  book  must  be  kept  in  the  office  of  the  corpor- 
ation, or  in  the  office  of  its  transfer  agent,  within  the  State,  contain- 


NEW  YORK. 


297 


ing  the  names,  alphabetically  arranged,  of  all  persons  who  are  stock- 
holders of  the  corporation,  showing  their  places  of  residence,  the 
number  of  shares  of  stock  held  by  them  respectively,  the  time  when 
they  respectively  became  the  owners  thereof,  and  the  amount  paid 
thereon.  Such  stock  book  shall  be  open  during  business  hours  for 
the  inspection  of  stockholders,  judgment  creditors  and  any  officer  of 
the  State  authorized  thereto  by  law.  For  refusal  to  allow  such 
inspection  of  the  books  the  corporation  and  the  officer  so  refusing 
shall  forfeit  the  sum  of  $250  to  be  recovered  by  the  person  to  whom 
such  refusal  was  made.  S.  C.  L.,  § 53. 

Reports.  The  same  reports  are  required  as  for  domestic  cor- 
porations. S.  C.  L.,  § 30;  Tax  Law,  § 189.  (See  Sec.  13,  “Reports.”) 

Attachments  Against.  May  be  had  without  regard  to  the  solvency 
of  the  corporation  in  cases  of  breach  of  contract,  conversion  of 
property  and  injury  to  person  or  property  in  consequence  of  negli- 
gence, fraud  or  other  wrongful  act.  Code  of  Civil  Procedure,  §§  635, 
636. 

15.  Combinations  and  Monopolies. 

No  domestic  stock  corporation  and  no  foreign  corporation  doing 
business  within  the  State  shall  combine  with  any  other  corporation 
or  person  for  the  creation  of  a monopoly,  or  the  unlawful  restraint 
of  trade  or  for  the  prevention  of  competition  in  any  necessity  of  life. 
S.  C.  L.,  § 7.  This  does  not,  however,  prevent  consolidations  and 
mergers  and  the  holding  of  controlling  interests  in  other  corporations. 
(See  “Corporate  Powers.”) 

A more  stringent  law  was  subsequently  passed,  declaring  void 
every  contract,  agreement  or  combination  to  restrain  or  prevent  com- 
petition or  to  establish  a monopoly  in  any  article  or  commodity  of 
common  use,  and  imposing  fine  and  imprisonment  for  violations  of 
its  provisions.  L.  1899,  Ch.  690. 


NORTH  CAROLINA. 


1.  Corporation  Laws.* 

Constitution.  (1868.)  State  ownership  or  control  of  corpora- 
tions prohibited  unless  submitted  to  popular  vote,  except  as  to  rail- 
roads unfinished  at  the  time  of  adoption  of  Constitution  or  in  which 
State  has  direct  pecuniary  interest.  Art.  V,  § 4.  Creation  of  corpora- 
tions by  special  laws  prohibited,  excepting  municipal  corporations 
and  such  others  as  can  not  attain  their  objects  under  the  general 
laws.  Art.  VIII,  § 1. 

Statutes.  The  general  corporation  law  of  North  Carolina  was 
adopted  in  1901,  being  Chapter  2 of  the  Session  laws  of  that  year, 
with  amendments  thereto  in  Laws  of  1903,  Chapters  93,  154,  247,  343, 
453.  5I0>  660,  766.  Special  acts  are  found  as  follows:  Railroads  and 

telegraphs,  Code,  Vol.  I,  Ch.  49;  banks,  Id.,  Vol.  II,  Ch.  4;  and  in- 
surance, Id.,  Vol.  II,  Ch.  29. 

Under  the  general  law  corporations  may  be  formed  for  any 
lawful  business  except  railroading,  banking  and  insurance.  § 8. 

The  Tax  Law  was  enacted  in  1901,  Chs.  7 and  9,  and  amended  by 
L.  1903,  Chs.  247,  251,  and  L.  1905,  Chs.  588,  590. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer:  For  each  $1,000 

of  authorized  capital  stock,  20  cents;  minimum  fee,  $25.  § 96. 

To  Secretary  of  State:  For  recording,  $1  for  first  three  copy 

sheets  and  10  cents  for  each  copy  sheet  in  excess;  for  copies,  same 
fee.  Seal,  50  cents.  For  issuing  and  recording  letters  patent,  in- 
cluding great  seal,  §2.  Recording  fees  to  Clerk  of  Superior  Court, 
$1  for  first  three  copy  sheets  and  10  cents  for  each  additional  copy 
sheet.  Id.;  L.  1893,  Ch.  318,  § 4. 

Franchise  Tax.  An  annual  franchise  tax  is  imposed  upon  busi- 
ness corporations  as  follows:  On  paid  in  or  subscribed  capital  stock 
of  $25,000  or  less,  $5;  over  $25,000  and  not  exceeding  $50,000,  $10; 
over  $50,000  and  not  exceeding  $100,000,  $25;  over  $100,000  and  not 
exceeding  $250,000,  $50;  over  $250,000  and  not  exceeding  $500,000, 
$100;  over  $500,000  and  not  exceeding  $1,000,000,  $200;  over  $1,000,000 
$500.  Tax  Law,  § 83. 


Local  Taxation.  Corporations  are  taxed  43  cents  on  each  $100 
of  the  actual  value  of  their  whole  capital  stock,  as  shown  by  annual 

* References  are  to  Laws  of  1901,  Ch.  2,  except  as  otherwise  noted.  Tax  Law 
references  are  to  Laws  of  1905,  Ch.  588. 

298 


NORTH  CAROLINA. 


299 


report  filed  in  June  of  each  year  (See  § 13;  “Reports”),  or,  on  failure 
or  inaccuracy  of  such  report,  as  appraised  by  State  Treasurer  and 
Auditor.  If  tax  is  not  paid  by  July  31st,  a penalty  of  5 per  cent,  may 
be  added.  But  on  payment  of  such  tax,  the  corporation  is  exempt 
from  any  further  report  of  or  tax  on  any  mortgages,  bonds,  securities 
or  credits.  Tax  Law,  §§  3,  4;  L.  1905,  Ch.  590,  § 34. 

General.  On  increase  of  capital  stock,  20  cents  on  each  $1,000 
of  increase;  minimum  fee,  $20.  On  extension  of  corporate  existence, 
same  fees  as  on  original  incorporation.  On  dissolution,  change  of 
name,  change  of  nature  of  business,  amended  certificate  (other  than 
increase  of  stock),  decrease  of  capital  stock,  increase  or  decrease  of 
par  value  or  number  of  shares,  each  $20;  filing  list  of  officers  and 
directors,  $1.  § 96. 

3.  Incorporation. 

Incorporators.  Must  be  not  less  than  three.  § 8.  They  must  be 
the  subscribers  to  the  amount  of  capital  stock  with  which  the  com- 
pany will  commence  business,  and  manage  corporate  affairs  until 
completed  organization.  §11. 

Certificate  of  Incorporation.  Must  be  signed,  sealed  and  ac- 
knowledged before  an  officer  authorized  by  the  laws  of  North  Car- 
olina to  take  acknowledgments  of  deeds  (§9),  and  must  set  forth 
(§8): 


(1)  Name  of  the  corporation.  May  not  be  similar  to  one 
in  use  by  an  existing  corporation  in  the  State,  and  must  end 
with  the  word  “ company  ” or  “ incorporated.”  L.  1903,  Ch. 
453.  May  be  changed  by  amendment.  § 29.  Must  be  con- 
spicuously displayed  at  door  of  principal  office.  § 50. 

(2)  Location  of  principal  office  in  the  State. 

(3)  Object  or  objects  for  which  corporation  is  formed. 

(4)  Amount  of  authorized  capital  stock;  number  of  shares 
and  par  value  of  each;  amount  of  capital  stock  with  which 
to  begin  business  and  if  there  be  more  than  one  class  of 
stock,  a description  of  the  different  classes  with  the  terms 
of  creation.  No  statutory  limitations  as  to  amount  of  capital 
stock  or  par  value  of  shares,  or  amount  with  which  to  begin 
business. 

(5)  Names  and  addresses  of  subscribers  and  number  of 
shares  subscribed  by  each;  the  aggregate  to  be  the  amount  of 
capital  stock  with  which  the  company  will  begin  business. 

(6)  The  period,  if  any,  limited  for  duration  of  the  com- 
pany. 

(7)  Any  other  provisions  which  the  incorporators  choose 
to  insert,  not  inconsistent  with  the  laws  of  the  State. 

Filing  and  Recording.  The  certificate  of  incorporation  is  filed 
and  recorded  with  the  Secretary  of  State  in  the  “ Corporation  Book,” 


300 


CLASSIFIED  CORPORATION  LAWS. 


and  on  payment  of  organization  tax  and  fees,  that  official  certifies  a 
copy  of  the  certificate  of  incorporation,  which  must  be  recorded  with 
the  clerk  of  the  superior  court  of  the  county  where  the  principal  office 
in  the  State  is  to  be  established,  in  a book  known  as  “ Record  of 
Incorporations.”  A copy  certified  either  by  the  Secretary  of  State 
or  by  said  clerk  is  prima  facie  evidence  of  due  organization.  §9; 
L.  1903,  Ch.  343. 


4.  Organization. 

First  Meetings.  Of  stockholders  must  be  held  at  the  principal 
office  within  the  State.  §49.  Is  called  by  notice  signed  by  a majority 
of  the  incorporators,  published  two  weeks  before  the  meeting  in  some 
newspaper  of  the  county  where  the  corporation  is  established,  or 
served  personally  two  days  before  the  meeting.  Notice  may  be  waiv- 
ed by  written  consent  of  all  the  incorporators.  § 18.  At  this  meeting 
by-laws  are  usually  adopted  and  directors  elected.  No  statutory  pro- 
visions as  to  first  meeting  of  directors.  Officers  are  elected  by  the 
stockholders  or  the  directors  as  prescribed  by  the  by-laws.  § 15. 

By-Laws.  Are  to  be  made  by  the  stockholders  unless  power 
thereto  is  conferred  on  the  directors,  in  which  case  the  directors’  by- 
laws are  subject  to  alteration  or  repeal  by  the  stockholders.  § 13. 
The  by-laws  may  provide  for  the  calling  and  conduct  of  meetings; 
quorum;  number  of  shares  to  entitle  members  to  one  or  more  votes; 
mode  of  voting  by  proxy,  and  of  selling  shares  for  non-payment  of 
assessments;  tenure  of  officers;  mode  of  filling  vacancies,  and  penal- 
ties for  by-law  violations,  not  to  exceed  $20  for  each  offence.  § 12. 

Certificates.  A statement  of  officers  elected,  location  of  office, 
etc.,  must  be  filed  with  Secretary  of  State  within  thirty  days  after 
every  election.  § 48.  (See  § 13,  “ Reports.”) 

5.  Corporate  Existence. 

When  Commenced.  On  filing  certificate  of  incorporation  with 
Secretary  of  State  (§  10),  and  extends,  when  no  period  is  stated  in 
the  certificate,  for  sixty  years.  § 1.  It  continues  three  years  after 
expiration  for  the  purpose  of  winding  up  affairs.  § 58. 

Beginning  Business.  May  be  commenced  as  soon  as  certificate 
of  incorporation  is  filed  with  the  Secretary  of  State.  Must  be  com- 
menced within  two  years.  § 106. 

Renewal.  May  be  had  by  regular  amendment,  and  paying  same 
tax  as  on  original  incorporation.  §§  29,  37. 

Forfeiture  of  Charter.  Occurs  on  failure  to  bring  corporate 
books  into  the  State  on  order  of  the  Superior  Court  (§  49)  or  to  pay 
annual  franchise  tax  for  three  successive  years.  Tax  Law,  § 83.  Ac- 
tion may  be  brought  by  Attorney  General  in  Superior  Court  to 
restrain  corporations  from  unlawful  exercise  of  franchises,  etc.  § 107. 
Charter  may  be  declared  forfeited  for  violations  of  law  against  com- 
binations, monopolies  and  conspiracies.  L.  1901,  Ch.  586,  § 3. 


NORTH  CAROLINA. 


301 


Dissolution.  Minute  provisions  for  voluntary  dissolution  require 
(§§  34-36)  resolution  of  directors,  two-thirds  vote  of  stockholders, 
publication  of  notice  for  four  weeks,  and  same  publication  of  certifi- 
cate of  dissolution,  which  is  to  be  filed  and  recorded  as  was  certifi- 
cate of  incorporation.  The  preliminary  proceedings  may  be  avoided 
by  obtaining  unanimous  written  consent  of  stockholders.  § 34.  Pro- 
cedure for  closing  of  affairs  after  dissolution  is  prescribed.  §§  58-65. 


6.  Corporate  Powers. 

General.  Liberal  general  powers  are  enumerated.  § 1. 

To  Hold  Property.  Property  may  be  held  to  extent  of  corpor- 
ate needs.  §§  1,  4. 

Its  Own  Stock.  Unless  restrained  by  some  provision  of 
its  organic  law,  a corporation  may  purchase  its  own  stock.  Blalock 
v.  Mfg.  Co.,  no  N.  C.  99  (1892).  But  not  in  derogation  of  the  rights 
of  creditors.  Heggie  v.  Ass’n,  107  N.  C.  581  (1890).  Shares  of  stock 
belonging  to  a corporation  may  not  be  voted,  directly  or  indirectly. 
§ 43- 

Stock  of  Other  Corporations.  May  be  held.  L.  1903, 

Ch.  660. 

To  Borrow  Money.  The  power  is  expressly  conferred.  §§  1-3. 
Also  corporations  are  permitted  to  sell  bonds  below  par,  and  pay 
commissions  on,  or  for  the  sale.  L.  1903,  Ch.  154. 

To  Do  Business  in  Other  States.  This  power  is  conferred.  A 
principal  office  must  always  be  maintained  within  the  State.  §§  1, 
38,  49- 


Consolidation  or  Merger.  No  statutory  provision. 

Amendment  of  Charter.  Before  any  part  of  the  stock  has  been 
paid,  the  certificate  may  be  amended  (except  by  increase  of  capital 
stock)  nunc  pro  tunc , merely  on  payment  of  recording  and  copying 
expenses,  the  new  certificate  to  be  signed  and  executed  by  the  same 
incorporators.  In  case  of  increase  of  capital  stock,  the  organization 
tax  is  paid  on  the  increase.  § 28.  A corporation  may  at  any  time 
change  the  nature  of  its  business  or  its  name;  increase  or  decrease 
its  capital  stock;  change  the  number  or  par  value  of  shares;  extend 
its  corporate  existence;  create  one  or  more  classes  of  preferred  stock, 
or  amend  charter  in  any  other  respect,  by  two-thirds  vote  of  each 
class  of  stock  at  a meeting  called  for  that  purpose  on  resolution  of 
the  board  of  directors,  on  notice  as  provided  by  by-laws,  or  in  the 
absence  of  such  provision,  by  ten  days’  notice  personally  or  by  mail. 
A certificate  of  any  such  amendment,  signed  by  the  president  and 
secretary  under  the  corporate  seal,  and  acknowledged  as  deeds  are 
acknowledged,  must  be  filed  and  recorded  as  was  original  certificate, 
together  with  the  written  assent  of  two-thirds  of  each  class  of  stock. 
§§  29,  30. 

Correction  of  errors  or  omissions  in  original  certificate  is  ac- 
complished in  the  same  manner.  § 109. 


302 


CLASSIFIED  CORPORATION  LAWS. 


7.  Capital  Stock. 

Amount.  Is  not  limited  by  law,  but  must  be  stated  in  certificate 
of  incorporation.  § 8. 

Initial  Payment.  No  direct  requirement,  but  the  amount  with 
which  the  corporation  is  to  begin  business  must  be  stated  in  the 
certificate  of  incorporation,  and  is  to  be  the  aggregate  amount  of  the 
subscriptions  of  the  incorporators.  § 8. 

Consideration  for  Issue.  Must  be  money,  labor  or  property, 
necessary  for  the  corporate  business.  §§  19,  53,  54.  In  the  absence 
of  actual  fraud  the  valuation  of  the  directors  is  conclusive,  and  stock 
issued  in  payment  is  full  paid  stock.  In  statements  and  reports  such 
stock  is  to  be  reported  according  to  the  facts.  §§  26,  54,  55.  The 
president  and  secretary  or  treasurer  must  file  certificate  of  payment 
of  each  instalment  of  capital  stock  with  the  Secretary  of  State  within 
ten  days  after  its  payment.  § 26. 

Directors  may  make  assessments  on  unpaid  stock  in  their  discre- 
tion, by  thirty  days’  notice,  personally,  by  mail,  or  by  publication  in 
the  county  where  the  corporation  is  established.  § 23.  On  default 
for  thirty  days  after  time  appointed  for  payment,  stock  may  be  sold 
at  public  auction,  after  three  weeks  of  notice  of  sale  by  publication 
and  by  mail.  §§  24,  25. 

Increase  or  Decrease.  Is  effected  by  regular  amendment.  § 29. 
On  increase,  certificate  must  be  published  once  a week  for  three 
weeks  in  the  county  in  which  the  principal  office  is  located,  commenc- 
ing within  fifteen  days  after  the  filing  of  the  certificate.  § 32. 

Classes  of  Stock.  May  be  created  in  certificate  of  incorporation 
(§8)  or  by  subsequent  amendment  (§29),  on  two-thirds  vote  of  the 
stock  outstanding  (L.  1903,  Ch.  660),  and  such  preferred  stock  may  be 
made  redeemable  at  par  at  any  fixed  time,  and  is  entitled  to  fixed 
dividends,  which  may  be  made  cumulative.  § 19. 

Par  Value  of  Shares.  To  be  specified  in  certificate  of  incorpora- 
tion. §8.  No  statutory  restrictions  as  to  amount.  May  be  changed 
by  regular  amendment.  § 29. 

Stock  Certificates.  Shall  be  signed  by  the  president  and  treas- 
urer or  secretary,  and  certify  the  number  of  shares  owned  by  the 
holder.  § 20.  They  must  show  the  annual  dividends  to  which  pre- 
ferred stock  is  entitled.  § 19.  Re-issue  to  replace  lost  certificate  is 
provided  for.  §§  94,  95. 

Transfer  of  Stock.  To  be  made  on  the  books  of  the  corporation 
as  prescribed  in  the  by-laws,  and  when  transferred  as  collateral  secu- 
rity, that  fact  must  appear  on  transfer  book.  §21. 

8.  Stockholders. 

Rights  and  Powers.  They  make  by-laws  and  control  amend- 
ments of  charter  by  two-thirds  vote  (§§  29,  34)  or  by  unanimous  con- 


NORTH  CAROLINA. 


303 


sent.  § 34.  Three  stockholders  may  call  elections.  § 51.  One  stock- 
holder may  apply  to  court  for  order  to  call  or  compel  meeting.  §46. 

Liability.  Stockholders  are  liable  only  for  unpaid  subscriptions. 
§ 22.  Execution  against  the  corporation  must  be  returned  unsatisfied, 
or  it  must  be  made  to  appear  to  the  satisfaction  of  the  court  that 
there  is  no  property  of  the  corporation  available  for  payment  of  the 
debt,  before  action  will  lie  against  stockholders.  § 92. 

Meetings.  Must  be  held  at  principal  office  in  the  State.  § 49. 

Notice.  May  be  governed  by  by-laws.  § 12.  If  directors,  for 
thirty  days  after  written  request  of  one-tenth  of  the  stock,  fail  to  call 
meeting  for  election,  any  stockholder  may  apply  to  the  judge  pre- 
siding in  the  district  where  the  principal  office  is  located,  whereupon 
such  meeting  is  ordered  in  the  same  manner  as  injunctions  are  ob- 
tained. § 46.  Or  three  stockholders  may  call  meetings  by  publishing 
ten  days’  notice.  § 51. 

Quorum.  Is  a majority  of  the  shares  or  amount  of  interest, 
unless  the  by-laws  prescribe  a smaller  proportion.  § 12. 

Voting.  At  elections  must  be  by  ballot,  unless  otherwise  pre- 
scribed by  the  charter  or  by-laws.  Polls  to  be  open  one  hour  unless 
waived.  § 39.  Cumulative  voting  provided  for.  § 40.  No  share  to 
be  voted  which  has  been  transferred  on  the  books  of  the  company 
within  twenty  days  before  the  election.  § 41. 

Proxies.  Voting  by  proxy  is  permitted  (§  12),  but  proxies  are 
not  valid  more  than  three  years.  § 41. 

9.  Directors. 

Number.  Must  be  not  less  than  three.  They  hold  office  for  one 
year,  unless  classified  by  the  certificate  of  incorporation,  in  which 
case  their  terms  may  be  from  one  to  five  years  according  to  the  num- 
ber of  classes,  one  class  to  be  elected  each  year.  § 14.  Number  if 
stated  in  certificate  may  be  changed  by  regular  amendment,  otherwise 
by  amendment  of  by-laws.  §§  8,  12. 

Qualifications.  Directors  must  be  stockholders  in  amount  to  be 
determined  by  by-laws  or  certificate  of  incorporation.  § 44.  One 
must  be  a resident  of  the  State.  § 14. 

Powers.  The  adoption  of  by-laws  may  be  delegated  to  them  in 
the  certificate  of  incorporation,  but  such  by-laws  are  always  subject 
to  repeal  and  alteration  by  stockholders.  § 13.  They  act  as  trustees 
on  dissolution.  § 59.  They  fill  vacancies  in  board  unless  by-laws  pre- 
scribe otherwise.  § 17. 

Liability.  For  loans  to  stockholders  (§  53),  for  declaring  and 
paying  dividends  otherwise  than  out  of  net  profits,  or  wdien  the  cor- 
porate debts  exceed  two-thirds  of  assets,  and  for  division,  etc.,  of 
any  part  of  the  capital  stock,  assenting  directors  are  jointly  and 
severally  liable  for  six  years  thereafter  to  the  corporation  or  its 
creditors  in  case  of  dissolution  or  insolvency  to  the  full  amount  of 
such  dividends  or  division.  Absent  directors  or  those  entering  dissent 
on  the  minutes  as  soon  as  they  have  notice  of  the  act  are  exempt. 
§ 33.  For  failure  to  publish  certificate  of  reduction  of  capital  stock, 
they  are  liable  for  corporate  debts  contracted  before  the  filing  of  the 


304 


classified  corporation  laws. 


certificate.  § 32.  Action  is  brought  by  Attorney  General  in  Superior 
Court  for  frauds  or  violation  of  law,  or  to  enforce  liability  or  remove 
the  officers.  § 107. 

Meetings.  Are  to  be  governed  by  by-laws.  § 12.  May  be  held 
outside  the  State.  § 49. 

Executive  Committee.  May  be  provided  for  by  certificate  of  in- 
corporation or  by-laws.  §§  8,  12,  16. 

10.  Officers. 

General.  A president  is  prescribed,  who  must  be  a director,  and 
a secretary  who  must  record  votes  of  the  corporation  and  directors 
in  a book  kept  for  that  purpose;  also  a treasurer  who  may  be  required 
to  give  bond,  and  any  other  officers  prescribed  by  by-laws  or  by  the 
directors.  § 16.  Any  two  offices  may  be  held  by  the  same  person, 
if  so  determined  by  the  electing  body.  § 15.  An  agent  must  be  in 
charge  of  the  principal  office  in  the  State,  on  whom  process  may  be 
served,  but  service  may  also  be  made  on  other  agents  according  to 
law.  §§  48,  49. 

Liability.  For  failure  to  file  certificate  of  payments  on  capital 
stock,  for  thirty  days  after  written  request  by  any  creditor  or  stock- 
holder, the  officers  responsible  are  jointly  and  severally  liable  for 
corporate  debts  contracted  before  filing  the  certificate.  § 27.  For 
false  certificates  or  public  notice,  the  officers  signing,  knowing  it  to 
be  false,  are  jointly  and  severally  liable  for  corporate  debts  contracted 
while  they  were  stockholders  or  officers.  § 56. 

11.  Principal  Office. 

Must  be  maintained  in  the  State  in  charge  of  an  agent  to  receive 
service  of  process.  §§38,  49;  L.  1903,  Ch.  806.  The  corporate  name 
must  be  conspicuously  displayed  at  the  entrance,  under  penalty  of 
$100  for  failure  to  do  so  for  sixty  days.  § 50.  Principal  office  may 
be  changed  by  a two-thirds  vote  of  the  board  of  directors.  Certificate 
of  change,  signed  by  the  president  and  secretary,  under  the  corporate 
seal,  must  be  filed  with  the  Secretary  of  State.  No  certificate  need 
be  filed  on  removal  from  one  point  to  another  within  the  same  city, 
town  or  township.  § 31. 

12.  Corporate  Books. 

What  Required.  Transfer  books  are  prescribed,  and  stock  books 
in  which  are  to  be  registered  the  names  and  residences  of  the  stock- 
holders, and  the  number  of  shares  held  by  them  respectively.  § 38. 
Votes  are  to  be  recorded  by  secretary.  § 15. 

Where  Kept.  The  stock  and  transfer  books  must  be  kept  at  the 
principal  and  registered  office  in  the  State  (§§  38,  49),  and  Superior 
Court  may  order  all  books  to  be  brought  within  the  State  on  penalty 
of  forfeiture  of  charter.  § 49. 


NORTH  CAROLINA. 


305 


Examination  of.  The  stock  and  transfer  books  are  open  to  the 
inspection  of  all  who  are  authorized  to  see  the  same.  § 49.  They  are 
open  during  usual  business  hours  to  the  examination  of  any  stock- 
holder. § 38.  They  must  be  produced  at  elections  and  are  the  only 
evidence  as  to  who  are  stockholders.  §§  38,  45,  49. 

13.  Reports. 

Every  corporation  authorized  to  transact  business  in  the  State 
must  within  thirty  days  after  every  election,  file  in  the  office  of  the 
Secretary  of  State,  authenticated  by  the  signatures  of  the  president 
and  secretary  of  the  corporation,  a statement  setting  forth:  The 

names  of  all  the  directors  and  officers;  date  of  election  or  appointment 
of  each;  term  of  office,  residence  and  post-office  address  of  each; 
character  of  corporate  business;  location,  with  street  and  number,  if 
any,  of  principal  office  in  the  State  and  name  of  agent  in  charge  there- 
of on  whom  process  may  be  served.  §48.  On  filing,  the  Secretary 
of  State  issues  a certificate  thereof.  Penalty  for  non-compliance  is 
line  of  $100.  § 48. 

Annual  tax  returns  are  to  be  made  to  the  State  Auditor,  in  June, 
stating:  (1)  Total  authorized  capital  stock.  (2)  Total  authorized 

number  of  shares.  (3)  Number  of  shares  issued.  (4)  Par  value  of 
each  share.  (5)  Amount  paid  on  each  share.  (6)  Amount  of  capital 
stock  paid  in.  (7)  Amount  of  capital  on  which  dividend  was  declared. 
(8)  Date  of  each  dividend  during  the  year  ending  June  1st.  (9) 
Amount  of  each  dividend  during  the  year  ending  with  the  first  Mon- 
day of  said  month.  (10)  Amount  of  surplus.  (11)  Highest  price  of 
sales  of  stock  between  May  1st  and  15th  preceding.  (12)  Highest 
price  of  sales  of  stock  during  the  year  aforesaid.  (13)  Average  price 
of  sales  of  stock  during  the  year. 

Any  two  of  the  principal  officers  of  the  corporation  must  between 
June  1st  and  15th,  appraise  the  cash  value  of  the  stock,  as  of  June  1st, 
and  certify  same  with  the  report;  but  the  Auditor  and  State  Treasurer 
if  not  satisfied  with  the  valuation,  may  make  further  examination 
and  appraise  the  stock  at  a different  valuation  from  which  an  appeal 
lies  to  the  courts.  And  on  failure  to  file  the  report  for  sixty  days 
the  said  State  officers  likewise  appraise  the  stock  at  a valuation  fixed 
by  them.  §34;  L.  1905,  Ch.  590. 

Publication  of  notices  may  always  be  waived,  but  not  so  of 
dissolution  and  reduction  of  capital  stock. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  before 
doing  business  in  the  State  must  file  with  the  Secretary  of  State  a 
copy  of  the  charter  or  articles  of  agreement,  attested  by  president  and 
secretary,  under  the  corporate  seal,  and  a statement  attested  in  like 
manner,  of  the  authorized  capital  stock,  amount  actually  issued, 
principal  office  in  the  State,  name  of  agent  in  charge  thereof,  and 
character  of  the  business  it  transacts,  also  names  and  post-office  ad- 
dresses of  its  officers  and  directors.  Fees,  10  cents  for  each  $1,000 
of  authorized  capital  stock;  minimum  fee,  $10;  maximum,  $100.  L. 
190 3,  Ch.  766,  amending  § 57. 

Corporations  having  no  property  in  the  State  and  no  agent  on 


306 


CLASSIFIED  CORPORATION  LAWS. 


(North  Carolina) 

whom  process  may  be  served,  may  be  served  by  leaving  papers  with 
Clerk  of  Corporation  Commission.  Fisher  v.  Ins.  Co.,  136  N.  C.  217 
(1904).  When  domesticated  it  may  not  remove  actions  to  federal 
courts  as  a non-resident.  Beach  v.  Ry.  Co.,  131  N.  C.  399  (1902). 

Penalties  for  Non-Compliance.  Fine  of  $500.  L.  1903,  Ch.  766. 

Taxation.  Annual  franchise  tax  is  the  same  as  of  domestic  cor- 
porations of  the  same  class.  Tax  Law,  §83;  Comms.  v.  Packing  Co., 
135  N.  C.  62  (1904). 

Books.  No  provisions. 

Reports.  Are  the  same  as  of  domestic  corporations.  § 48. 

Attachments  Against.  Lie  against  as  foreign  corporations  only 
when  they  have  property  in  the  State  and  cause  of  action  arises  in 
the  State.  Code,  §§349,  363;  L.  1905,  Ch.  294. 

15.  Combinations  and  Monopolies. 

Are  provided  against  by  Ch.  586  of  Laws  of  1901,  the  penalties 
being  fine  of  $500  for  each  violation  (§  5),  voidance  of  all  contracts 
in  violation  thereof  (§6),  and  forfeiture  of  charter.  §§2-4.  Live 
stock  and  agricultural  products  in  hands  of  producer  are  exempt  from 
the  provisions  of  the  act. 


NORTH  DAKOTA. 


1.  Corporation  Laws.* 

Constitution.  (1889.)  No  charter  except  for  a municipal  cor- 
poration or  a State  eleemosynary  or  reformatory  institution  shall  be 
granted  by  special  law.  § 131.  Corporate  business  confined  to  that 
expressly  authorized  by  charter.  § 137.  No  stock  or  bonds  to  be 
issued  except  for  money,  labor  or  property  actually  received.  § 138. 
Majority  of  stock  must  vote  to  increase  stock  at  meeting  called  on 
sixty  days’  notice.  Id.  Fictitious  increase  of  stock  or  indebtedness 
void.  Id.  Cumulative  voting  must  be  allowed.  § 135.  Foreign  cor- 
porations doing  business  in  the  State  must  maintain  an  office  in  the 
State  in  charge  of  an  agent  to  receive  service  of  process.  § 136.  Com- 
binations to  control  prices  of  products  of  the  soil,  articles  of  manu- 
facture or  commerce,  or  means  of  transportation,  are  unlawful  and 
franchises  of  guilty  companies  are  to  be  forfeited.  § 146. 

Statutes.  The  General  Corporation  Law  of  North  Dakota  is  con- 
tained in  Code  of  1899,  §§  2850-2943  and  § 3265  a.  Under  this  law 
corporations  may  be  formed  for  any  purpose  for  which  individuals 
may  lawfully  associate  themselves.  Amendments  are  found  in  L. 
1901,  Ch.  93;  L.  1903,  Ch.  59;  L.  1905,  Chs.  66-69.  Special  provision  is 
made  for  railroad,  insurance,  mining  and  manufacturing  (§§  3154-3161), 
bridge,  religious,  educational  and  benevolent,  building,  telephone, 
banking  and  trust  corporations.  §§  3261-3265  provide  for  foreign  cor- 
porations. 

2.  Taxes  and  Fees. 

Organization  Expenses.  Fees  paid  into  State  Treasury  on  or  be- 
fore filing  of  articles  of  incorporation:  On  capital  stock  not  exceed- 

ing $50,000,  $50,  and  $5  for  every  additional  $10,000  or  fraction  thereof. 
§ 2865.  Certain  local  corporations  are  exempt  from  this  tax. 

To  Secretary  of  State:  For  filing  articles  of  incorporation,  $5; 

for  issuing  certificate  of  corporate  existence,  $3;  for  recording,  25 
cents  per  folio;  for  copies,  same.  For  certificate  and  seal,  $1;  signa- 
ture and  seal  without  certificate,  50  cents.  L.  1901,  Ch.  93. 

Franchise  Tax.  There  is  no  annual  franchise  tax. 

Local  Taxation.  Shareholders  are  not  taxed  if  corporation  pays 
tax  on  property  represented  by  stock.  § 1190.  Stock  of  foreign  cor- 
porations is  taxed.  § 1191.  Capital  stock  is  taxed  to  the  corporation 

* References,  except  where  otherwise  noted,  are  to  Code  of  1899. 


307 


308 


CLASSIFIED  CORPORATION  LAWS. 


only  on  surplus  value  over  real  and  personal  property  assessed. 
§ 1198.  (See  § 13,  “Reports.”) 

General.  Fees  to  Secretary  of  State:  For  filing  and  recording 
notice  of  removal  of  place  of  business,  filing  certificate  of  increase  or 
decrease  of  capital  stock,  issuing  certificate  of  same,  filing  certificate 
of  continuance  of  corporate  existence,  and  issuing  certificate  of  same, 
$3  each.  L.  1901,  Ch.  93.  Fees  paid  into  State  Treasury,  on  increase 
of  capital  stock,  $5  on  every  $10,000  or  fraction  thereof  of  increase. 
§ 2866. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more  persons  (§  2858),  one- 
third  of  whom  must  be  residents  of  the  State.  § 2864. 

Articles  of  Incorporation.  Must  be  subscribed  and  acknowledged 
by  each  of  the  incorporators  (§  2864),  and  set  forth: 

(1)  Name  of  the  corporation. 

(2)  Purpose  for  which  it  is  formed. 

(3)  Place  where  principal  business  is  to  be  transacted. 

(4)  Term  for  which  it  is  to  exist,  not  exceeding  twenty 
years.  § 2882. 

(5)  Number  of  directors  or  trustees  and  names  and  resi- 
dences of  those  to  serve  until  election  of  successors. 

(6)  Amount  of  capital  stock  and  the  number  of  shares. 
§ 2861. 

Special  clauses  are  provided  for  wagon  road,  telegraph  and  tele- 
phone and  railway  corporations.  §§  2862,  2863,  3155.  Mining,  manu- 
facturing and  industrial  corporations  may  provide  in  the  articles  of 
incorporation  for  an  office  at  any  desired  place  within  the  United 
States,  and  that  meetings  of  stockholders  may  be  held  therein.  Main 
office  must,  however,  be  in  State.  § 3160. 

Filing  and  Recording.  The  articles  are  filed  and  recorded  with 
the  Secretary  of  State,  together  with  the  receipt  of  the  State  Treas- 
urer for  the  incorporation  tax.  The  Secretary  of  State  issues  certifi- 
cate of  corporate  existence.  §§  2867,  2868.  A statement  of  the  post- 
office  address  of  the  business  office  must  also  be  filed.  L.  1905. 

4.  Organization. 

First  Meetings.  Unless  otherwise  provided  in  the  articles  of  in- 
corporation, all  meetings  of  stockholders  must  be  held  at  office  in 
the  State.  §§  2898,  3160.  By-laws  must  be  adopted  within  one  month 
after  incorporation,  either  by  majority  at  meeting,  or  by  written 
assent  of  two-thirds  of  the  stock.  Notice  of  meeting  must  be  pub- 
lished twice  a week  for  two  successive  weeks  in  newspaper  in  the 


NORTH  DAKOTA. 


309 


county  of  the  principal  office,  or  if  none  there,  at  the  capital.  § 2883. 
The  directors  named  in  the  articles  hold  office  only  until  their  suc- 
cessors are  elected  and  qualify.  § 2861.  At  this  first  meeting  at  which 
by-laws  are  adopted,  or  at  such  subsequent  meeting  as  may  then  be 
designated,  directors  must  be  elected  to  hold  office  one  year.  § 2887. 
Immediately  on  the  election  of  the  first  elective  directors,  they  are 
to  elect  a president  out  of  their  number,  a secretary  and  a treasurer. 
§ 2890. 

By-Laws.  Are  adopted  by  the  stockholders,  but  power  over  the 
by-laws  may  be  delegated  to  the  directors  by  a two-thirds  vote  of 
the  stock.  Directors’  by-laws  are  subject  to  amendment  and  re- 
peal by  the  stockholders.  § 2885.  May  provide:  (1)  Time,  place  and 

manner  of  calling  and  conducting  meetings.  (2)  Stockholders’ 
quorum.  (3)  Mode  of  voting  by  proxy.  (4)  Time  of  annual  election 
of  directors,  and  mode  and  manner  of  giving  notice  of  same.  (5) 
Compensation  and  duties  of  officers.  (6)  Manner  of  election  and 
tenure  of  office  of  all  officers  other  than  directors.  (7)  Suitable 
penalties  for  violations  of  by-laws,  not  exceeding  $100  for  any  one 
offence.  § 2884. 

The  by-laws  must  be  certified  by  a majority  of  the  directors  and 
copied  in  “Book  of  By-Laws.”  § 2885. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  by  Secretary  of  State  of  certifi- 
cate. § 2868.  Is  not  to  exceed  twenty  years.  §§  2882,  3154.  Can  not 
be  inquired  into  collaterally.  § 2852. 

Beginning  Business.  May  be  commenced  forthwith,  and  must 
be  commenced  within  one  year.  §§  2913,  3265  a. 

Renewal.  May  be  had  by  amendment  any  time  before  expiration 
of  the  charter,  for  term  not  exceeding  twenty  years.  § 2909. 

Forfeiture  of  Charter.  Failure  to  commence  business  within  one 
year  after  incorporation  or  to  maintain  proper  office  and  agent  in 
charge  within  the  State  (§§  2913,  3265  a),  or  violation  of  statute  against 
trusts  and  combinations  (§  7484b;  Const.,  § 146),  are  grounds  for 
forfeiture  of  charter.  Also  failure  to  file  annual  report  for  sixty 
days  after  notice  received.  L.  1905. 

Dissolution.  Dissolution  may  be  accomplished  by  application  to 
the  court  showing  assent  of  two-thirds  of  the  issued  stock  and  that 
all  claims  and  demands  against  the  corporation  have  been  satisfied. 
§ 2912. 

6.  Corporate  Powers. 

General.  General  common  law  powers  are  enumerated.  § 2882. 
Corporations  not  allowed  to  engage  in  any  business  not  expressly 
authorized  by  charter.  Const.,  § 137. 


3io 


CLASSIFIED  CORPORATION  LAWS. 


To  Hold  Property.  Business  corporations  have  power  to  hold 
property  to  the  extent  of  the  legitimate  purposes  of  the  corpora- 
tion. § 2882. 

Its  Own  Stock.  Unless  otherwise  provided  in  charter 
or  by-laws,  a corporation  may  purchase,  hold  and  transfer  shares  of 
its  own  stock  from  its  surplus  profits,  or  at  sale  for  delinquent  assess- 
ments, or  by  unanimous  consent  in  writing  of  the  stockholders,  on 
terms  decided  on  by  them.  § 2880.  Such  stock  is  non-assessable  and 
non-dividend  bearing,  and  may  not  be  voted,  a majority  of  the  re- 
maining shares  to  be  a majority  of  the  stock  for  all  purposes.  §§  2929, 
2930. 

Stock  of  Other  Corporations.  No  provisions. 

To  Borrow  Money.  Corporation  may  contract  obligations  essen- 
tial to  the  transaction  of  its  ordinary  affairs.  § 2882.  Bonds  may  be 
issued  only  on  assent  of  two-thirds  of  the  entire  capital  stock,  and 
then  only  for  money,  property  or  labor  actually  received.  § 2877; 
Const.,  § 138.  Procedure  prescribed.  § 2906.  Debts  must  not  exceed 
amount  of  subscribed  capital  stock.  § 2891. 

To  Do  Business  in  Other  States.  Meetings  of  board  of  direc- 
tors may  be  held  without  the  State.  §§  2898,  2899.  Mining,  manu- 
facturing and  other  industrial  corporations  are  permitted  to  hold 
stockholders’  meetings  without  the  State  if  so  provided  in  the  articles 
of  incorporation.  § 3160. 

Consolidation  or  Merger.  Consolidation  of  business  corporations 
is  not  provided  for.  Railroads  whose  lines  are  not  parallel  or  com- 
peting, and  which  can  be  operated  as  a continuous  line,  may  con- 
solidate. § 2954;  Const.,  § 141. 

Amendment  of  Charter.  May  be  effected  by  two-thirds  vote  of 
the  capital  stock,  or  by  written  assent  of  three-fourths  thereof.  Meet- 
ing to  be  called  as  provided  for  increase  of  stock,  and  certificate  to 
be  executed,  filed  and  recorded  as  there  provided.  §§  2908-2911,  2905. 

7.  Capital  Stock. 

Amount.  Not  limited  by  law,  but  is  to  be  stated  in  articles  of 
incorporation.  § 2861. 

Initial  Payment.  Not  prescribed. 

Consideration  for  Issue.  No  corporation  may  issue  stock  except 
for  money,  labor  done  or  property,  estimated  at  its  true  money  value, 
actually  received.  Const.,  § 138.  Officers  consenting  to  the  issuance 
of  stock  or  bonds  for  labor  or  property  in  excess  of  its  actual  cash 
value,  or  who  having  knowledge  thereof,  do  not  dissent  in  writing, 
are  jointly  and  severally  liable  to  the  creditors  of  the  corporation  for 
the  difference.  No  note  or  obligation  given  by  a stockholder,  whether 
secured  by  pledge  or  otherwise,  shall  be  taken  as  payment  for  stock. 
§§  2877,  2878.  No  corporation  may  issue  stock  with  an  agreement  or 
understanding  that  the  par  value  shall  not  be  paid  therefor.  § 2876. 

Increase  or  Decrease.  May  be  made  upon  two-thirds  vote  of  the 
capital  stock  at  meeting  after  sixty  days’  personal  notice,  and  if  any 


NORTH  DAKOTA. 


3 ii 


stockholders  are  non-residents  or  addresses  are  unknown,  by  publi- 
cation once  a week  for  sixty  days  in  a newspaper  published  in  the 
county  of  the  principal  office.  Notice  to  state  the  amount  to  which 
it  is  proposed  to  increase  or  diminish  the  stock.  If  approved,  a cer- 
tificate must  be  executed  by  the  chairman  and  secretary  of  the  meet- 
ing and  a majority  of  the  directors,  showing  compliance  with  the 
above  requirements,  the  amount  of  the  proposed  increase  or  decrease, 
the  amount  of  stock  represented  at  the  meeting,  and  the  vote  taken. 
This  is  filed  and  recorded  as  were  the  original  articles  of  incorpora- 
tion, and  certificate  is  issued  by  Secretary  of  State  on  payment  of 
fees.  § 2905;  Const.,  § 138. 

Classes  of  Stock.  No  provision. 

Par  Value  of  Shares.  Is  not  prescribed. 

Stock  Certificates.  Signed  by  the  president  and  secretary.  May 
be  issued  prior  to  full  payment  if  so  provided  in  the  by-laws.  All  cer- 
tificates of  full  paid  stock  must  be  so  endorsed.  If  issued  before  full 
payment,  the  secretary  must  before  issue  endorse  thereon  the  amount 
paid,  under  penalty  of  personal  liability  for  all  damages.  § 2876. 

Transfer  of  Stock.  May  be  made  by  endorsement  and  delivery 
of  certificates,  but  is  not  valid  except  as  between  the  parties  thereto 
until  entered  on  the  books  of  the  corporation,  with  date  and  names 
of  parties  to  the  transfer  and  description  of  shares.  § 2876. 

8.  Stockholders. 

Rights  and  Powers.  Stockholders  control  amendments,  dissolu- 
tion, issue  of  bonds,  etc.,  by  two-thirds  vote,  or  by  written  consent  of 
three-fourths  of  the  stock.  §§  2905,  2908,  2910-2912.  Three  may  apply 
to  justice  of  the  peace  for  warrant  to  call  meetings  (§  2896)  whenever 
there  is  no  person  authorized  to  do  so.  § 2901.  One-half  the  stock 
may  call  meeting  for  annual  election  or  for  removal  of  director. 
§§  2894,  2896. 

Liability.  Stockholders  are  liable  only  to  the  extent  of  unpaid 
subscriptions,  recoverable  in  joint  or  several  action,  the  court  to  de- 
termine amount  due  from  each  and  several  judgments  to  be  entered. 
§ 2902.  Transfer  of  shares  does  not  relieve  from  liability.  Id.  Stock- 
holders of  mining,  manufacturing  and  other  industrial  companies  are 
liable  for  claims  of  laborers  employed,  after  judgment  against  the  cor- 
poration has  been  returned  unsatisfied.  Action  must  be  brought 
within  four  months.  § 3157. 

Meetings.  Annual  election  of  directors,  unless  otherwise  pro- 
vided in  by-laws,  must  be  held  on  first  Tuesday  in  June.  § 2886. 
Must  be  held  at  the  principal  office  in  the  State  (§  2898),  except  in 
case  of  mining,  manufacturing  and  other  industrial  corporations  hav- 
ing otherwise  provided  in  their  articles  of  incorporation.  § 3160.  In 
absence  of  provision  in  by-laws  for  notice,  two  publications  are  re- 
quired in  two  successive  weeks  prior  to  the  meeting  in  a newspaper 
published  in  the  county  of  the  principal  office,  or  if  none  there,  at 
seat  of  government.  §§  2883,  2886.  Notice  may  be  waived  for  meet- 


312 


CLASSIFIED  CORPORATION  LAWS. 


mgs  (except  for  increase  of  stock  or  indebtedness,  for  which  sixty 
days’  notice  is  required  by  the  Constitution,  § 138)  when  all  stock- 
holders are  present  and  sign  consent  in  writing  on  record.  § 2903. 
Cumulative  voting  is  provided  for.  § 2888;  Const.,  § 135.  A majority 
is  a quorum.  Voting  by  proxy  is  permitted.  Shares  transferred  with- 
in ten  days  not  entitled  to  vote.  § 2895. 

9.  Directors. 

Number.  Not  less  than  three  nor  more  than  eleven.  § 2889. 
May  be  removed  by  two-thirds  vote  of  stock,  at  a meeting  which  may 
be  called  for  that  purpose  by  one-half  the  stock.  § 2894. 

Qualifications.  Must  be  stockholders  in  such  amount  as  by-laws 
prescribe.  One  must  be  a resident  of  the  State.  § 2889.  Compensa- 
tion may  be  provided  in  the  by-laws.  § 2884. 

Powers.  Power  to  make  by-laws  may  be  delegated  to  them. 
§ 2885.  They  may  fill  vacancies  on  board,  unless  otherwise  provided 
by  the  by-laws.  § 2889.  They  are  trustees  on  dissolution,  unless 
other  persons  are  appointed  by  the  court.  § 2914;  L.  1903,  Ch.  59. 

Liability.  Directors  are  jointly  and  severally  liable  to  the  full 
amount,  for  making  dividends  except  from  surplus  profits;  for  divid- 
ing or  withdrawing  any  part  of  the  capital  stock;  for  creating  debts 
beyond  subscribed  capital  stock,  or  for  unlawfully  reducing  or  in- 
creasing capital  stock.  Statute  of  Limitations  does  not  bar  action  to 
enforce  such  liability.  §§  2891,  2892.  Those  absent  or  who  enter 
dissent  at  large  on  the  record,  are  exempted  from  this  liability.  For 
false  reports,  certificates,  public  notice  or  entry,  officers  are  liable 
for  resulting  damage.  § 2893.  For  issuing  certificate  of  stock  not 
full  paid  without  endorsement  of  amount  paid,  officers  are  liable  to 
purchasers  in  good  faith  and  to  creditors  for  damages  sustained. 
§ 2876.  For  issuing  stock  or  bonds  for  insufficient  value  in  property 
or  labor,  they  are  liable  for  difference.  § 2877. 

Meetings.  Any  corporation  having  a director  resident  in  the 
State,  or  a duly  appointed  agent  therein  to  receive  service  of  process, 
may  hold  directors’  meetings  within  or  without  the  State  as  provided 
in  the  by-laws.  § 2899.  Other  corporations  must  hold  election  of 
officers  at  the  principal  place  of  business  in  the  State.  § 2898.  Rail- 
roads, mining,  manufacturing  and  other  industrial  corporations  may 
hold  directors’  meetings  at  business  office.  §§  2898,  3160. 

Unless  otherwise  provided  in  the  by-laws,  directors’  meetings 
must  be  called  by  special  written  notice  to  each  director  by  the  secre- 
tary on  order  of  the  president  or  of  two  directors.  § 2900.  A ma- 
jority is  a quorum.  § 2890. 

Executive  Committee.  Not  expressly  authorized,  but  is  undoubt- 
edly within  scope  of  the  by-laws.  § 2882. 

10.  Officers. 

A president,  who  must  be  a director,  a secretary  and  a treasurer 
are  prescribed,  their  duties  and  compensation  to  be  fixed  by  the  by- 


NORTH  DAKOTA. 


313 


laws.  §§  2890,  2884.  If  business  is  not  regularly  carried  on  and  an 
office  maintained  in  the  State,  the  Secretary  of  State  must  be  ap- 
pointed attorney  of  the  corporation  to  receive  service  of  process. 

§ 3265  a.  Treasurer  of  mining,  manufacturing  or  other  industrial 
company  may  be  required  to  furnish  statements  of  accounts  every 
six  months,  on  penalty  of  $50,  and  $10  for  each  day’s  delay.  § 3159. 

11.  Principal  Office. 

The  main  office  must  be  maintained  in  the  State,  with  resident 
agent  therein  on  whom  process  may  be  served.  §§  2898,  2899,  3160, 
3265  a.  It  may  be  changed  in  the  manner  prescribed  for  increase  of 
capital  stock,  except  that  notice  and  meeting  may  be  avoided  by  writ- 
ten assent  of  three-fourths  of  the  stock.  § 2911. 

12.  Corporate  Books. 

What  Required.  A record  of  all  business  transactions  must  be 
kept;  also  a journal  of  all  meetings,  whether  regular  or  special,  giv- 
ing time,  place  and  object,  how  authorized  and  notice  given,  with 
any  act  done  or  ordered  to  be  done  and  those  present  and  absent. 
On  request  of  any  person,  the  time  of  his  entrance  and  exit  must  be 
noted;  ayes  and  noes  may  also  be  required  to  be  noted  and  protests 
to  any  action  or  proposed  action  may  be  required  to  be  noted  in  full. 
§ 2907.  A “Stock  and  Transfer  Book”  is  prescribed  to  show  all  the 
stock;  alphabetical  list  of  stockholders;  instalments  paid  and  unpaid; 
assessments  levied,  and  paid  or  unpaid;  every  transfer,  with  date, 
by  and  to  whom,  and  such  other  facts  as  by-laws  may  prescribe. 
§ 2907.  Also  “Book  of  By-Laws.”  § 2885.  Books  of  account  are  pre- 
scribed for  mining  and  some  other  companies.  § 3156. 

Where  Kept.  At  the  main  office  in  the  State.  §§  2885,  2898. 

Examination  of.  The  “Book  of  By-Laws”  is  open  to  inspection 
of  the  public  during  office  hours.  § 2885.  The  other  books  are  open 
to  examination  by  any  director,  stockholder  or  creditor.  § 2907. 
Books  of  account  and  vouchers  of  mining,  manufacturing  and  other 
industrial  corporations  are  at  all  reasonable  times  open  to  inspec- 
tion of  stockholders  and  at  least  once  a year  a statement  must  be 
laid  before  them.  § 3156.  As  often  as  every  six  months,  holders  of 
twenty  per  cent,  of  the  capital  stock  may  demand  statements  from 
the  treasurer,  which  must  be  kept  on  file  for  inspection  at  the  office. 
§ 3159. 

13.  Reports. 

Between  July  1st  and  August  1st,  every  corporation,  domestic 
and  foreign,  must  report  to  the  Secretary  of  State,  on  blank  forms 
sent  out  by  him  before  June  1st,  the  location  of  its  principal  office  in 
the  State,  names,  residences  and  post-office  addresses  of  its  officers, 
with  date  of  expiration  of  their  respective  terms  of  office;  whether  or 
not  the  corporation  is  pursuing  active  business  under  its  charter,  and 
the  kind  of  business  engaged  in.  The  report  to  be  sworn  to  by  one 
of  the  chief  officers,  under  the  corporate  seal.  Fee,  $2.50.  Penalty 


314 


CLASSIFIED  CORPORATION  LAWS. 


for  failure  for  sixty  days  after  notice  to  file  such  report  by  registered 
letter,  forfeiture  of  charter  or  right  to  do  business  by  entry  on  records 
in  Secretary  of  State’s  office.  L.  1905. 

Tax  returns,  sworn  to  by  the  president,  secretary  or  principal 
accounting  officer,  must  be  made  to  the  county  assessor  where  the 
principal  office  is  located,  or  if  there  is  no  such  office,  where  busi- 
ness is  carried  on.  § 1183.  These  returns  are  filed  between  April  1st 
and  June  1st  of  each  year  as  of  April  1st  (§  1189),  and  set  forth: 
(1)  Name  and  location  of  company.  (2)  Amount  of  capital  stock 
authorized,  and  number  of  shares  into  which  it  is  divided.  (3) 
Amount  of  capital  stock  paid  up.  (4)  Market  value,  or  if  there  is 
no  market  value,  the  actual  value  of  the  shares  of  stock.  (5)  Total 
amount  of  indebtedness  except  that  for  current  expenses,  excluding 
from  such  expenses  the  amount  paid  for  purchase  or  improvements 
of  property.  (6)  Value  of  all  real  property.  (7)  Value  of  personal 
property.  § 1198. 

Every  mining,  manufacturing  or  other  industrial  corporation 
must  annually,  within  twenty  days  from  January  1st,  make  a report 
signed  by  the  president  and  a majority  of  the  directors,  verified  by 
president  and  secretary,  to  be  published  in  the  newspaper  nearest  the 
corporation’s  place  of  business,  and  be  filed  with  the  Register  of 
Deeds  of  the  county  in  which  its  business  is  carried  on,  stating  the 
capital  stock  and  the  amount  thereof  actually  paid  in;  amount  and 
nature  of  its  indebtedness  and  amounts  due  the  corporation;  number 
and  amounts  of  dividends,  and  when  paid,  and  the  net  profits.  Neglect 
to  make,  publish  and  file  such  report  is  a misdemeanor.  § 3158. 

Publication  of  annual  reports  of  mining,  manufacturing  and 
other  industrial  corporations  is  required.  § 3158.  Publication  of 
notices  of  meetings  may  be  dispensed  with  by  waiver  or  written  as- 
sents, except  in  case  of  increase  of  stock  or  indebtedness  where  per- 
sonal service  can  not  be  had.  Notices  of  dissolution  or  of  sale  of 
stock  for  non-payment  of  assessments  must  be  published. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  foreign  corporation  shall 
transact  business  or  hold  property  in  the  State  until  it  has  filed  and 
recorded  duly  authenticated  copy  of  its  charter  with  the  Secretary 
of  State  (§  3261),  and  has,  by  a duly  executed  instrument  in  writing 
filed  in  said  office,  appointed  the  Secretary  of  State  its  attorney  on 
whom  process  may  be  served.  §§  3261-3263;  Const.,  § 136.  Every 
foreign  corporation  must  have  one  or  more  places  of  business  in  the 
State.  Id.  Fees  on  filing  articles  with  Secretary  of  State,  $20;  ap- 
pointment of  attorney,  $5.  § 95;  L.  1901,  Ch.  93. 

Penalties  for  Non-Compliance.  Officers  and  agents  are  per- 
sonally liable  for  all  corporate  debts  (§  3264),  and  contracts  made  on 
behalf  of  the  corporation  are  void.  § 3265.  They  are  subject  to  the 
law  against  trusts  passed  in  1905,  with  penalty  of  forfeiture  of  right 
to  do  business  in  the  State. 

Taxation.  There  are  no  special  regulations. 

Books  and  Reports.  Foreign  corporations  are  made  subject  to 
all  the  penal  provisions  relating  to  these  and  other  subjects.  § 7535. 


NORTH  DAKOTA. 


315 


Affidavit  as  to  trusts  is  required  to  be  filed  on  or  before  September 
1st  of  each  year.  L.  1905.  And  annual  report  as  by  domestic  corpora- 
tion. L.  1905. 

Attachments  Against.  Attachment  lies  on  the  ground  of  being 
a foreign  corporation.  § 5352. 

15.  Combinations  and  Monopolies. 

Are  prohibited  by  the  Constitution  (§  146),  the  provisions  of 
which  are  carried  into  effect  by  §§  7480-7484  d.  Unlawful  combina- 
tion is  made  a misdemeanor,  with  penalty  of  fine  from  1 to  20  per 
cent,  of  capital  stock.  §§  7481,  7482.  Persons  injured  may  recover 
the'full  amount  paid  for  any  goods  or  articles  controlled  by  any  com- 
bination or  trust.  § 7484  d.  There  are  also  fines  and  imprisonment 
prescribed  for  individual  offenders,  as  officers  or  agents,  from  $100 
to  $5,000,  and  one  to  ten  years.  § 7484c.  A more  effective  law  was 
passed  in  1905,  under  which  Secretary  of  State  is  to  require  affidavits 
in  prescribed  form  from  all  corporations  on  or  about  September  1st 
of  each  year. 


OHIO. 


i.  Corporation  Laws.* 

Constitution.  (1851.)  Corporations  may  not  be  created  by 
special  act.  Art.  XIII,  §§  1,  2.  Stockholders  are  liable  for  corporate 
debts  contracted  since  November  23,  1903,  only  • to  the  extent  of 
amounts  due  on  their  subscriptions  to  stock.  Id.,  § 3,  as  amended 
Nov.  21,  1903. 

Statutes.  The  corporation  law  of  Ohio  is  contained  in  Laning’s 
Revised  Statutes,  1905,  Part  Second,  Title  II,  of  which  Chapters  1 
and  19  contain  general  provisions,  and  the  intervening  chapters  treat 
specially  of  railroad,  union  depot,  canal,  road,  bridge,  gas  and  water, 
hydraulic,  cemetery,  insurance,  agricultural,  humane,  educational,  re- 
ligious, banking  and  building  and  loan  corporations. 

Corporations  may  be  formed  under  the  general  provisions  for 
any  purpose  for  which  individuals  may  lawfully  associate,  except  for 
carrying  on  any  professional  business.  § 5167. 


2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  For  filing  arti- 
cles of  incorporation  when  capital  stock  is  $10,000  or  under,  $10;  if 
over  $10,000,  one-tenth  of  one  per  cent,  of  the  authorized  capital 
stock.  § 181.  For  certificates  under  Great  Seal,  $1.  Recording  same, 
20  cents  per  folio.  § 181,  subdiv.  17,  18.  For  copies  of  articles  or 
other  papers,  10  cents  per  folio  and  50  cents  for  seal.  §§  180,  181, 
subdiv.  19.  Filing  certificate  of  subscription  of  ten  per  cent.,  $2. 
§ 181,  subdiv.  15. 

Franchise  Tax.  An  annual  fee  of  one-tenth  of  one  per  cent,  is 
imposed  on  the  subscribed  or  issued  and  outstanding  stock;  minimum 
fee,  $10.  §4150.  (See  §13,  “Reports.”)  Excise  taxes  are  imposed 

on  corporations  enjoying  special  franchises.  §§4086-4149;  Southern 
Gum  Co.  v.  Laylin,  66  Oh.  St.  578  (1902). 

Local  Taxation.  Personal  property  must  be  listed  within  five 
days  after  receipt  of  blanks  from  assessor,  as  of  the  second  Monday 
of  April  (§§4074,  4077),  and  corporations  are  required  to  make  re- 
turn under  oath  during  May  to  the  State  Auditor  of  the  property 
returned  to  the  County  Auditors.  § 4086.  Shares  of  stock  of  domestic 
corporations  are  not  taxed.  Nor  are  the  shares  of  foreign  corpora- 
tions when  two-thirds  of  their  property  is  taxed  in  the  State  of  Ohio 

* References,  unless  otherwise  stated,  are  to  Laning’s  Revised  Statutes,  1905. 


OHIO. 

Enactments  of  1906. 


1.  Corporation  Laws.* 

Statutes.  Amendments  relating  to  ship  canal  companies  are  found 
in  Senate  Bill  142,  p.  151.  Amendments  relating  to  title  guarantee 
companies  are  found  in  House  Bill  393,  p.  153.  -Amendments  relating 
to  building  and  loan  associations  are  found  in  Senate  Bill  140,  p.  173. 

4.  Organization. 

First  Meetings.  Sections  3244  and  3267  are  amended  by  a pro- 
vision raising  the  maximum  number  of  directors  that  may  be  elected 
to  thirty.  L.  1906,  Senate  Bill  177,  p.  294. 

6.  Corporate  Powers. 

Amendment  of  Charter.  Section  3267  is  amended  so  that  at  any 
regular  meeting  of  stockholders  or  at  any  meeting  called  as  provided 
in  Section  3246,  .a  majority  of  stock  may  increase  the  number  of 
directors  to  any  number  not  exceeding  thirty.  L.  1906,  Senate  Bill 
177,  P-  295. 

Sale  of  Entire  Assets.  Amendments  are  found  in  Sections  3256b, 
3256c,  32566  and  3256c,  which  have  been  added  to  the  statutes.  They 
prescribe  the  conditions  and  procedure  when  the  entire  assets  of  a 
corporation  are  to  be  sold.  Any  sale  of  the  entire  corporate  property 
and  assets  to  other  persons  or  corporations  must  be  first  authorized 
as  to  terms  by  three-fourths  of  the  directors  and  such  sale  must  not  be 
for  the  purpose  of  forming  any  trust  or  combination  to  restrain  trade 
or  competition.  § 3256b.  The  stockholders  must  then  be  duly  notified 
of  the  meeting  both  by  mail  and  publication  ten  days  before  the  meet- 
ing, unless  all  are  present  in  person  or  by  proxy  and  waive  notice  in 
writing.  The  vote  shall  be  by  ballot  and  three-fourths  of  all  the  votes 
cast  at  the  meeting  shall  be  necessary  for  adoption.  § 3256c.  Any 
dissatisfied  stockholder  shall  be  paid  the  value  of  his  stock  at  the  time 
the  corporate  assets  are  sold,  such  value  to  be  determined  by  arbitra- 
tion in  case  of  any  disagreement.  § 3256d.  If  any  dissatisfied  stock- 
holder refuses  to  arbitrate,  procedure  is  prescribed  for  determining 
value  and  paying  same  into  court  for  his  benefit.  § 3256c.  L.  1906, 
House  Bill  31 1,  p.  229. 

9.  Directors. 

Number.  The  maximum  number  of  directors  allowed  is  raised 
from  fifteen  to  thirty.  L.  1906,  Senate  Bill  177,  pp.  294-5. 

* References  are  to  Bates’  Annotated  Ohio  Statutes. 


OHIO. 


317 


and  the  remainder  in  another  state,  and  if  the  franchise  taxes  are 
paid  as  required  of  domestic  corporations.  § 183;  Lander  v.  Burke, 
65  Oh.  St.  532  (1901). 

General.  To  Secretary  of  State:  For  filing  certificate  of  increase 
of  capital  stock  or  consolidation,  same  as  on  original  capitalization. 
For  filing  certificate  of  reduction  of  capital  stock  or  change  of  name, 
extension  of  purpose,  change  of  domicile  or  dissolution,  $5.  For 
any  amendments,  20  cents  per  folio;  minimum  fee,  $5.  § 181. 

3.  Incorporation. 

Incorporators.  Must  be  not  less  than  five  and  a majority  must 
be  citizens- of  the  State.  §5169.  They  are  liable  for  any  deficiency 
in  actual  payment  of  initial  subscription  as  certified  to  by  them. 
§5178.  (See  §4,  “Organization.”)  Shawnee,  etc.  Co.  v.  Miller,  Ohio 
Circ.  1903,  p.  198. 

Articles  of  Incorporation.  Must  be  subscribed  and  acknowledged 
by  the  incorporators,  and  contain  (§5169): 

(1)  Name  of  the  corporation,  commencing  with  “the”  and 
ending  with  “ company.”  The  name  must  not  so  closely 
resemble  that  of  another  existing  corporation  as  to  cause  con- 
fusion, unless  with  written  consent  of  such  other  company, 
nor  must  it  be  misleading  as  to  the  nature  of  the  business 
authorized.  § 5171.  It  may  be  changed  by  regular  amend- 
ment. § 5172. 

(2)  Location  of  office  or  principal  place  of  business.  Must 
be  within  State. 

(3)  Purpose  for  which  it  is  formed. 

(4)  Amount  of  capital  stock  and  number  of  shares.  No 
restrictions  as  to  either. 

Provision  may  be  made  in  the  articles  for  common  and  preferred 
stock  (this  latter  not  at  any  time  to  exceed  two-thirds  of  the  paid  in 
capital  stock)  and  for  dividends  on  same,  not  to  exceed  eight  per 
cent.;  also  for  qualifications  or  restrictions  of  voting  powers  of  stock. 
§5168. 

Filing  and  Recording.  The  official  character  of  the  officer  taking 
the  acknowledgment  of  the  articles  must  be  certified  to  by  the  clerk 
of  the  court  of  common  pleas  of  the  county  where  the  acknowledg- 
ment is  taken,  and  the  articles  are  then  filed  and  recorded  with  the 
Secretary  of  State,  who  issues  certified  copy  of  the  same.  § 5171. 

4.  Organization. 

Opening  Books.  After  the  filing  of  the  articles,  the  incorporators 
meet  and  fix  a time  and  place  for  the  opening  of  books  of  subscrip- 
tion. Notice  thereof  must  be  inserted  for  thirty  days  in  a newspaper 
published  or  of  general  circulation  in  the  county  or  counties  where 


3iS 


CLASSIFIED  CORPORATION  LAWS. 


the  books  are  opened;  but  such  notice  may  be  waived  by  written 
agreement  of  all  the  incorporators,  entered  on  the  corporate  records. 
At  the  appointed  time  and  place  or  places,  proper  subscription  books 
must  be  opened.  § 5176. 

Organization  Meetings.  As  soon  as  10  per  cent,  of  the  capital 
stock  has  been  subscribed,  a majority  of  the  incorporators  must  so 
certify  in  writing  to  the  Secretary  of  State,  and  thereupon  they  call 
a meeting  of  stockholders  on  thirty  days’  notice  published,  as  afore- 
stated,  for  the  election  of  directors.  Notice  of  the  meeting  may  be 
waived  by  written  consent  of  all  the  incorporators  entered  on  the 
records  in  person  or  by  proxy.  § 5178.  The  incorporators  present  at 
the  first  meeting  of  stockholders  act  as  inspectors  of  election  and 
appoint  time  and  place  for  first  directors’  meeting.  § 5179.  Voting 
at  election  is  by  ballot,  may  be  by  proxy,  and  must  be  cumulative 
unless  otherwise  prescribed  by  the  articles  of  incorporation. 

By-Laws.  May  be  adopted  or  changed  by  consent  in  writing  of 
two-thirds  of  the  stockholders  or  members,  or  by  a majority  at  a 
meeting  duly  held  for  that  purpose,  called  by  the  acting  president  by 
personal  notice  or  by  publication.  § 5192.  They  may  regulate  when 
no  other  provision  is  made  by  law:  (1)  Time,  place  and  manner  of 

calling  and  conducting  meetings.  (2)  Time  of  annual  election  of 
directors  or  trustees,  and  mode  and  manner  of  giving  notice  thereof. 
(4)  Duties  and  compensation  of  officers.  (5)  Manner  of  election  or 
appointment  and  tenure  of  all  officers  other  than  directors  or  trustees. 
§ 5193.  By-laws  may  be  adopted  by  the  directors  or  trustees  for  their 
government,  subject  to  the  regulations  of  the  corporation,  and  may 
be  changed  at  pleasure.  § 5191. 

Certificates.  The  incorporators  must  file  a certificate  with  the 
Secretary  of  State  before  their  first  meeting  is  held,  showing  that  10 
per  cent,  of  the  authorized  capital  stock  has  been  subscribed.  § 5178. 
They  are  liable  for  any  failure  of  payment  of  this  initial  subscription 
certified  by  them.  Id. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  the  articles  of  incorporation  with 
the  Secretary  of  State.  § 5173.  May  be  perpetual,  except  corpora- 
tions dealing  in  real  estate,  which  are  limited  to  twenty-five  years. 
§ 5167.  Duration  need  not  be  stated  in  articles  of  incorporation. 
Can  not  be  questioned  under  general  denial.  Minzey  v.  Mfg.  Co., 
Oh.  Circ.  1904,  593. 

Beginning  Business.  May  not  be  commenced  until  10  per  cent, 
of  the  capital  stock  has  been  subscribed  and  has  been  paid  in  (Brewer 
& Laubscher’s  Ohio  Corporations  (1900),  p.  25),  and  until  certifi- 
cate has  been  filed  and  directors  have  been  elected.  §§  5177,  5178. 
Business  must  be  commenced  within  five  years  from  incorporation. 
§ 6780. 

Renewal.  No  provisions,  the  law  contemplating  incorporation 
in  perpetuity. 


OHIO. 


319 


Forfeiture  of  Charter.  Quo  warranto  lies  for  non-user,  misuser, 
etc.,  or  for  violation  of  anti-trust  law,  of  franchise  right,  etc.  § 7588, 
io353-io386.  For  failure  to  file  annual  report  and  pay  the  annual  fee, 
the  Attorney  General  at  request  of  Secretary  of  State  must  bring 
action  to  annul  charter.  § 4154. 

Dissolution.  Before  payment  of  any  part  of  the  capital  stock, 
or  incurring  debts,  the  corporation  may  surrender  its  charter.  § 9206. 
After  organization  a majority  of  the  directors  representing  at  least 
one-third  of  the  stock  may  apply  to  the  court  for  dissolution  or  a 
majority  of  the  stockholders  may  direct  such  application  to  be  made. 
§§  9183-9221.  One-fifth  of  stockholders  in  a manufacturing  or  mining 
corporation  may  petition  for  dissolution.  § 9205.  Certificate  must 
be  filed  with  Secretary  of  State  and  fee  of  $5  paid.  § 4157. 

6.  Corporate  Powers. 

General.  Corporations  have  the  usual  common  law  powers  and 
may  do  all  needful  acts  to  carry  the  objects  of  incorporation  into 
effect.  § 5173. 

To  Hold  Property.  The  duration  of  real  estate  corporation  is 
limited  to  twenty-five  years  and  judicial  sale  of  real  estate  held  by 
such  corporation  is  directed  by  action  to  be  instituted  by  the  direc- 
tors within  sixty  days  after  the  expiration  of  the  twenty-fourth  year. 
§ 5167.  Other  corporations  may  hold  and  convey  such  real  property 
as  may  be  necessary  or  convenient  to  carry  into  effect  their  purposes. 
§ 5173. 

Its  Own  Stock.  A corporation  may  become  the  pur- 
chaser of  its  own  stock  only  when  necessary  to  secure  payment  of 
debts  owing  to  it.  State  v.  Bank,  10  Ohio  91. 

Stock  of  Other  Corporations.  Any  private  corporation 
may  acquire  and  hold  shares  in  kindred  but  not  competing  corpora- 
tions, domestic  or  foreign,  so  long  as  no  trust  or  combination  in 
restraint  of  trade  is  formed.  § 5199.  Mining  and  manufacturing 
companies  may  hold  stock  in  transportation  companies,  by  assent  of 
two-thirds  of  the  stock.  § 6346. 

To  Borrow  Money.  A corporation  may  borrow  money,  not  ex- 
ceeding the  amount  of  its  capital  stock,  and  issue  its  notes  or  coupon 
or  registered  bonds  therefor,  bearing  any  rate  of  interest  authorized 
by  law,  and  may  secure  the  same  by  mortgage  on  its  real  or  personal 
property  or  both.  § 5199.  And  may  borrow  upon  its  obligations  con- 
vertible into  stock  on  consent  of  three-fourths  of  its  stock  and  to  the 
amount  of  one-half  its  paid  in  capital.  §5201;  Kreisser  v.  Gas  Light 
Co.,  Oh.  Circ.  1903,  p.  313. 

To  Do  Business  in  Other  States.  Mining  and  manufacturing 
companies  are  permitted  to  hold  property  and  carry  on  business,  or 
so  much  thereof  as  is  convenient  beyond  the  limits  of  the  State. 
§ 6345- 

Consolidation  or  Merger.  There  are  no  provisions  for  merger 
of  ordinary  business  corporations.  Mining  and  manufacturing  com- 
panies may  consolidate  by  agreement  of  the  boards  of  directors, 


320 


CLASSIFIED  CORPORATION  LAWS. 


ratified  by  the  stockholders  and  filed  with  the  Secretary  of  State. 
§§  5M6,  5447,  6347;  N.  W.  Ins.  Co.  v.  Hare,  Oh.  Circ.  1905,  197. 

Amendment  of  Charter.  The  stockholders  may  change  the  cor- 
porate name,  or  the  place  of  location  or  where  principal  business  is 
transacted,  or  enlarge,  modify  or  diminish  the  corporate  objects  or 
purposes,  or  add  to  the  articles  anything  omitted  which  might  law- 
fully be  inserted,  excepting  to  increase  or  decrease  the  capital  stock 
or  change  substantially  the  original  purposes  of  organization,  by  a 
three-fourths  vote  of  the  subscribed  capital  stock  at  any  meeting 
called  on  thirty  days’  notice  in  a newspaper  published  and  of  general 
circulation  in  the  county  where  the  principal  place  of  business  is 
located.  Certificate  of  the  amendment,  verified  by  the  president  and 
secretary  under  the  corporate  seal,  must  be  filed  and  recorded  with 
the  Secretary  of  State,  and  the  secretary  of  the  corporation  must  give 
three  weeks’  notice  of  such  amendment  by  publication  in  a newspaper 
as  above  specified.  All  notices  may  be  waived  by  unanimous  written 
consent  of  the  stockholders  or  members.  § 5172.  (See  “ Increase  or 
Decrease,”  under  § 7.) 

7.  Capital  Stock. 

Amount.  Must  be  stated  in  articles  of  incorporation  (§5169), 
but  is  not  limited  by  law. 

Initial  Payment.  Must  be  ten  per  cent,  of  entire  capital.  Brewer 
& Laubscher’s  Ohio  Corporations  (1900),  p.  25. 

Consideration  for  Issue.  No  specific  provision.  It  is  clear,  how- 
ever, that  the  law  contemplates  the  receipt  of  money  or  its  value  only 
in  payment  of  subscriptions.  Gates  v.  Tippecanoe  Co.  57  Ohio  St.  60 
(1897);  Ford  v.  Samson,  17  C.  C.  539  (1899).  Original  purchases  of 
stock  at  less  than  par  in  good  faith,  to  aid  the  corporation  and  with 
no  profit  to  the  purchasers,  did  not  render  them  liable  for  the  differ- 
ence. Peter  v.  Union  Mfg.  Co.,  56  Ohio  St.  181  (1897).  After  the 
initial  payment  of  ten  per  cent,  of  the  entire  capital  stock,  amounts 
due  on  subscriptions  may  be  paid  in  such  instalments,  times  and 
places  as  the  directors  determine.  § 5177.  If  instalment  remains  un- 
paid sixty  days  after  demand,  action  may  be  brought,  or  the  directors 
may  sell  the  stock  at  public  auction,  giving  thirty  days’  notice  by 
publication  in  the  county  where  stockholder  resides,  or  if  a non- 
resident, in  the  county  where  the  principal  office  is  located.  § 5194. 

Increase  or  Decrease.  Before  organization,  increase  of  capital 
stock  may  be  effected  after  the  entire  original  amount  has  been  sub- 
scribed and  ten  per  cent,  thereof  has  been  paid,  by  unanimous  written 
consent  of  the  original  subscribers.  After  organization  it  may  be 
accomplished  by  majority  vote  of  the  stock,  at  a meeting  called  for 
the  purpose  by  a majority  of  the  directors,  on  thirty  days’  notice  by 
publication  and  by  mail.  Notice  may  be  waived  if  all  the  stockholders 
are  present  in  person  or  by  proxy,  or  consent  in  writing  to  the  in- 
crease. A certificate  of  increase  must  be  filed  with  the  Secretary  of 
State.  § 5213- 

Reduction  of  capital  stock  and  of  the  nominal  value  of  shares 
may  be  made  by  the  directors,  with  the  written  consent  of  a majority 


OHIO. 


321 


of  the  stock,  but  not  to  affect  or  impair  the  rights  of  creditors.  Cer- 
tificate to  be  filed  with  Secretary  of  State.  § 52I5- 

Classes  of  Stock.  Preferred  stock  may  be  authorized  by  articles 
of  incorporation.  Also  it  may  be  authorized  as  part  of  any  increase 
of  stock  by  written  assent  of  three-fourths  in  number  of  the  stock- 
holders, representing  at  least  three-fourths  of  the  capital  stock.  Cer- 
tificate thereof  must  be  filed  with  the  Secretary  of  State.  Preferred 
stock  must  not  at  any  time  exceed  two-thirds  of  the  actual  paid  up 
capital  and  its  annual  dividend  must  not  exceed  eight  per  cent.  Pre- 
ferred stockholders  are  liable  for  corporate  debts  only  after  liability 
of  common  stockholders  has  been  exhausted,  and  are  entitled  to 
preference  in  distribution  of  assets.  §§  5168,  5214. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Stockholders  are  entitled  to  certificates  of 
paid  up  stock,  and  on  demand,  the  president  and  secretary  must  exe- 
cute and  deliver  certificate  showing  the  true  amount  of  the  stock  held. 
§ 5195.  Provision  is  made  for  re-issue  of  lost  certificate  by  application 
to  probate  courts.  § 3254,  1,  2. 

Transfer  of  Stock.  Must  be  entered  on  the  books  of  the  corpora- 
tion on  demand  of  the  assignee.  §5195;  Farmers  Bk.  v.  S.  & L.  Co., 
66  Oh.  St.  367  (1902). 

8.  Stockholders. 

Rights  and  Powers.  They  have  the  usual  powers  and  rights. 
They  are  entitled  to  have  annual  statement  of  the  financial  condition 
of  the  corporation  showing  its  assets  and  liabilities  and  also  a list  of 
stockholders  with  their  residences.  §5223;  Keystone  Bank  v.  Co., 
Oh.  Circ.  1904,  p.  464. 

Liability.  Formerly  stockholders  of  Ohio  corporations  were  lia- 
ble for  corporate  debts  to  the  amount  of  any  unpaid  stock  subscrip- 
tions and  in  addition  thereto  to  an  amount  equal  to  the  par  value  of 
their  stock.  By  an  amendment  to  the  Constitution  (Art.  XIII,  § 3) 
adopted  and  effective  Nov.  23,  1903,  this  double  liability  was  abolished 
as  to  all  corporate  debts  created  after  that  date  and  stockholders  are 
now  liable  on  corporate  debts  contracted  since  Nov.  23,  1903,  only 
to  the  extent  of  unpaid  subscriptions.  § 5202. 

Meetings.  In  the  absence  of  statutory  provision  otherwise, 
stockholders’  meetings  must  be  held  wtihin  the  State.  Except  as 
otherwise  provided  by  the  law,  the  time,  place  and  manner  of  conduct- 
ing meetings  are  to  be  regulated  by  the  by-laws.  § 5193.  Unless 
otherwise  regulated  in  by-laws,  the  annual  election  is  to  be  held  on 
the  first  Monday  of  January.  If  not  held  on  day  appointed,  it  may  be 
held  at  any  meeting  called  on  ten  days’  published  notice  by  the  di- 
rectors or  any  two  stockholders,  or  by  personal  notice  in  writing  or 
at  any  meeting  at  which  all  the  stockholders  are  present  in  person  or 
by  proxy.  § 5187. 

Such  of  the  subscribers  to  the  articles  of  incorporation  as  are 
present  act  as  inspectors  of  election  for  first  meeting  (§  5179),  but  for 


322 


CLASSIFIED  CORPORATION  LAWS. 


regular  elections  inspectors  are  appointed  only  by  court  on  applica- 
tion of  voters  holding  at  least  one-tenth  of  the  capital  stock  made  on 
due  notice  fifteen  days  before  the  election.  §§  5182,  5183. 

Voting  at  elections  is  by  ballot.  § 5179.  Voting  by  proxy  is 
permitted.  §§  5178,  5179.  Cumulative  voting  is  prescribed.  Quorum 
is  prescribed  by  by-laws  but  a majority  of  the  shares  is  necessary  for 
a choice.  No  share  may  be  voted  on  which  any  instalment  is  due 
and  unpaid.  § 5179. 

9.  Directors. 

Number.  Must  not  be  less  than  five  nor  more  than  fifteen. 
§5178.  Number  may  be  changed  by  majority  vote  at  any  regularly 
called  meeting  of  the  stockholders.  § 5222. 

Qualifications.  All  must  be  stockholders  in  amount  determined 
by  the  by-laws  and  a majority  must  be  citizens  of  the  State.  § 5189. 
Trustees  or  directors  must  take  oath  of  office.  § 5188. 

Powers.  They  have  general  charge  of  the  corporate  affairs  and 
property.  The  directors  are  trustees  on  voluntary  dissolution  (§9208), 
unless  receiver  be  appointed  by  court  (§9189),  by  the  legislature  or 
by  the  stockholders.  § 9208.  They  may  adopt  by-laws  for  their  own 
government,  subject  to  the  regulations  of  the  stockholders.  § 5191. 

Liability.  The  directors  are  liable  for  illegal  dividends.  Rules 
for  calculating  profits  are  prescribed  (§5220),  and  for  any  violation 
of  these  regulations,  the  directors  are  personally  liable  to  creditors 
and  stockholders  for  any  loss  sustained.  § 5221.  All  statutory  liabili- 
ties of  stockholders,  directors  and  officers  are  determined  by  court  of 
common  pleas  in  a creditor’s  action,  by  appointing  a receiver,  bring- 
ing in  other  creditors,  publishing  notices  for  non-resident  stockhold- 
ers, etc.  §§  5205-5212. 

Meetings.  May  be  regulated  by  directors’  by-laws.  §5191.  Any 
action  of  the  directors  borrowing  money,  issuing  bonds,  or  involving 
an  expenditure  of  money,  shall  be  by  a yea  and  nay  vote,  and  the 
records  must  show  the  vote  of  each  director.  § 5201.  A majority 
forms  a quorum.  § 5188. 

Executive  Committee.  No  statutory  provision. 

10.  Officers. 

A president,  who  must  be  a director,  is  prescribed  and  a secretary 
and  treasurer,  unless  otherwise  regulated.  § 5188.  Executive  officers 
must  be  stockholders  in  an  amount  determined  by  the  by-laws.  Any 
receiver  appointed  must  be  a resident  citizen  of  the  State.  § 5189. 
The  principal  accounting  officer  must  be  a resident  of  the  State. 
§ 6338.  (See  “ Liability,”  under  § 9.) 

11.  Principal  Office. 

Must  be  maintained  in  the  State  and  be  named  in  the  articles  of 
incorporation.  § 5169.  It  may  be  changed  by  regular  amendment. 
Manufacturing  companies  must  maintain  principal  office  in  one  of  the 


OHIO. 


323 


counties  in  which  business  is  carried  on,  and  notice  of  location  or 
any  change  thereof  must  be  published  in  newspaper  of  general  circu- 
lation in  such  county.  § 6338. 

12.  Corporate  Books. 

What  Required.  The  directors  must  keep  a record  of  stock  sub- 
scribed and  transferred  and  any  assignee  may  demand  the  registry 
of  transfer  on  the  books.  § 5195.  Manufacturing  companies  are 
directed  to  keep  accurate  accounts  showing  financial  condition  of  the 
company,  its  capital  stock  and  shares,  its  property  of  every  descrip- 
tion, and  credits  subject  to  taxation.  §6338. 

Where  Kept.  Manufacturing  companies  must  keep  account 
books  at  principal  office  in  one  of  the  counties  where  business  is 
carried  on.  § 6338. 

Examination  of.  The  stock  record  and  transfer  books  shall  be 
open  to  the  inspection  of  stockholders  at  all  reasonable  times.  § 5195. 
Account  books  of  manufacturing  companies  must  be  open  to  the 
inspection  of  assessor.  § 6338. 

13.  Reports. 

Business  corporations  must  annually  during  May  report  to  the 
Secretary  of  State:  (1)  Name  of  the  corporation.  (2)  Location  of 

principal  office.  (3)  Names  of  president,  secretary,  treasurer  and 
members  of  board  of  directors,  with  post-office  address  of  each.  (4) 
Date  of  annual  election  of  officers.  (5)  Amount  of  authorized  capital 
stock  and  par  value  of  each  share.  (6)  Amount  of  capital  stock  sub- 
scribed, amount  issued  and  outstanding  and  amount  paid  up.  (7) 
Nature  and  kind  of  business  engaged  in  and  place  or  places  of  busi- 
ness. (8)  Change  or  changes,  if  any,  in  the  above  particulars  since 
last  annual  report.  Report  must  be  sworn  to  by  an  executive  officer. 
§4150. 

A newly  organized  corporation  is  not  required  to  file  its  report 
until  the  May  next  following  the  expiration  of  six  months  after  the 
date  of  its  incorporation.  § 4156. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  before 
doing  business  in  Ohio  must  file  with  the  Secretary  of  State  in  form 
prescribed  by  him,  a statement  under  oath  of  the  proper  officer,  con- 
taining: (1)  Number  of  shares  of  authorized  capital  stock  and  par 

value  of  each  share.  (2)  Name  and  location  of  offices  in  Ohio,  and 
name  and  address  of  officers  or  agents  in  charge  of  the  business  in 
Ohio.  (3)  Value  of  property  owned  and  used  by  the  company  in  Ohio 
and  where  situated;  value  of  property  owned  and  used  outside  of 
Ohio.  (4)  Proportion  of  capital  stock  represented  by  property  and 
owned  and  used  in  Ohio  and  by  business  transacted  there,  on  which 
proportion  a tax  of  one-tenth  of  one  per  cent,  is  paid.  § 183. 

Also  before  securing  a certificate  of  authority  they  must  file  with 
the  Secretary  of  State  a sworn  copy  of  the  certificate  of  incorporation, 
together  with  a statement  under  the  corporate  seal  setting  forth  the 
capital  stock,  objects  of  incorporation,  what  business  it  proposes  to 


324 


CLASSIFIED  CORPORATION  LAWS. 


(Ohio) 

do  in  Ohio,  and  designating  a place  of  business  in  the  State  in  charge 
of  an  agent  to  receive  service  of  process.  § 184.  Fees  to  the  Secre- 
tary of  State  for  certificate:  On  capitalization  of  $100,000  or  less,  $15; 
from  $100,000  to  $300,000,  $20;  from  $300,000  to  $500,000,  $25;  from 
$500,000  to  $1,000,000,  $30;  $1,000,000  or  more,  $50.  § 184. 

Upon  payment  of  the  fees  and  tax  prescribed,  the  Secretary  of 
State  issues  a certificate  of  authority  empowering  the  corporation  to 
do  business  within  the  State.  § 184. 

Penalties  for  Non-Compliance.  Fine  of  $1,000  and  an  additional 
$1,000  for  every  month  of  continued  default.  Also  inability  to  sue 
on  any  contract  made  in  the  State.  §§  183,  184. 

Taxation.  Of  property  same  as  of  individuals  and  same  returns 
must  be  made  during  month  of  May.  Same  excise  fees  must  be  paid. 
§§4086-4149;  Foote  v.  Co.,  Oh.  Circ.  1905,  p.  378. 

Books.  Right  to  examination  of  books  will  be  enforced  by 
mandamus.  Ohio  v.  Farmer,  7 C.  C.  429  (1893). 

Reports.  Foreign  corporations  must  make  an  annual  report  to 
the  Secretary  of  State  during  the  month  of  September,  containing: 
(1)  Name  of  corporation  and  under  the  laws  of  what  state  or  country 
organized.  (2)  Location  of  principal  office.  (3)  Names  of  president, 
secretary,  treasurer  and  directors,  with  post-office  address  of  each. 
(4)  Date  of  annual  election  of  officers.  (5)  Authorized  capital  stock 
apd  par  value  of  each  share.  (6)  Amount  of  stock  subscribed,  amount 
issued,  and  amount  paid  up.  (7)  Nature  of  business  and  place  or 
places  of  business  both  within  and  without  the  State  of  Ohio.  (8) 
Name  and  location  of  its  office  or  offices  in  Ohio,  and  the  name  and 
address  of  the  officers  or  agents  in  charge  of  the  corporate  business 
in  Ohio.  (9)  Value  of  property  owned  and  used  by  the  company  in 
Ohio,  whefe  situated,  and  value  of  property  owned  and  used  outside 
of  Ohio  and  where  situated.  (10)  Change  or  changes  if  any  in  the 
above  particulars  since  last  annual  report.  On  filing  such  report, 
sworn  to  by  any  proper  officer,  an  annual  privilege  fee  of  one-tenth 
of  one  per  cent,  on  capital  employed  in  Ohio  is  paid  to  Secretary  of 
State  (§4151)  in  addition  to  the  fees  stated  in  §§  183  and  184. 

Penalty  for  failure  to  file  report  or  pay  fee  as  prescribed,  $1,000 
and  $10  additional  for  each  day’s  omission,  which  may  be  remitted  by 
Governor  or  Secretary  of  State.  § 183. 

On  each  increase  of  stock  employed  in  the  State,  foreign  corpora- 
tions pay  the  same  fee  as  on  original  authorization  on  the  amount 
of  increase,  and  they  are  required  to  file  a statement  of  such  increase 
within  thirty  days  thereof.  § 183. 

Attachments  Against.  On  complying  with  the  law  enabling  it  to 
do  business  in  the  State,  a foreign  corporation  is  exempt  from  attach- 
ment on  the  ground  of  being  a foreign  corporation  or  non-resident. 

§183. 

15.  Combinations  and  Monopolies. 

Are  provided  against  with  penalties  of  forfeiture  of  charter  or 
right  to  do  business  in  the  State,  and  fines  and  imprisonment  for 
individual  offenders,  each  day’s  violation  to  constitute  a separate 
offence.  §§7560-7597;  State  v.  Gage,  72  Oh.  St.  210  (1905)- 


OKLAHOMA. 


1.  Corporation  Laws.* 

Act  of  U.  S.  Congress.  (July  30,  1886.)  24  U.  S.  St.  at  L.,  p.  170, 
provides  that  no  local  or  special  laws  granting  charters  or  franchises 
to  corporations  shall  be  passed  by  the  legislature  of  the  territories; 
prohibits  public  ownership  or  interest  in  corporations,  and  permits 
general  laws  for  the  formation  of  the  corporations  enumerated. 
(See  “ Statutes.”)  §§  1,  2,  5. 

Statutes.  The  corporation  law  of  Oklahoma  is  contained  in  Ch. 
18  of  the  Revised  Statutes,  1903,  of  which  Articles  1-8,  inclusive,  treat 
of  corporations  generally,  Article  12  of  mining  and  manufacturing 
corporations,  and  the  remaining  Articles  treat  specially  of  railroads 
and  street  railways,  and  road,  bridge,  trust,  guaranty,  religious,  benev- 
olent, educational,  cemetery,  banking  and  loan,  and  agricultural  cor- 
porations. Article  23  provides  for  foreign  corporations.  There  is  a 
separate  banking  law  found  in  Ch.  8,  and  an  insurance  law  in  Ch.  43 
of  the  Revised  Statutes.  Under  the  general  law  corporations  may  be 
formed  for  any  mining,  manufacturing  or  industrial  pursuit.  § 941. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Territorial.  Secretary:  For  filing 

articles  of  incorporation,  $5;  issuing  certificate,  $3;  seal,  $1.  Record- 
ing, 10  cents  per  folio;  copies  at  same  rate.  § 3059. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Shares  of  stock  in  the  hands  of  stockholders 

are  taxed  and  must  be  listed  by  holders  (§  5928),  as  of  March  1st  of 

each  year.  Depreciated  stock  may  be  listed  at  its  actual  value. 
§ 5948.  There  are  certain  temporary  exemptions  and  reductions 

to  encourage  cotton  fabric  manufactures  (§  1105)  and  irrigation. 

§§  3301-4. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 941.  One-third  must 
be  residents.  § 946. 

Articles  of  Incorporation.  Must  be  signed  and  acknowledged 
by  each  of  the  incorporators  (§  946),  and  must  set  forth  (§  943): 

(1)  Name  of  corporation.  No  statutory  limitations  as  to 
selection  of  name,  but  in  practice  two  corporations  of  the 

* Sections  given  are  of  Revised  Statutes  of  1903  (Wilson’s). 


325 


326 


CLASSIFIED  CORPORATION  LAWS. 


same  name  are  not  allowed.  May  not  be  changed  unless 
expressly  authorized  by  law.  § 934. 

(2)  Purposes  for  which  it  is  formed. 

(3)  Place  where  its  principal  business  is  to  be  transacted. 

(4)  Term  for  which  it  is  to  exist.  Limited  to  twenty  years 
for  mining,  manufacturing  and  industrial  corporations.  § 1084. 

(5)  Number  of  directors  or  trustees;  their  qualifications, 
and  the  names  and  residences  of  those  who  are  to  serve  until 
the  election  of  a board  of  directors. 

(6)  Amount  of  capital  stock,  and  the  number  of  shares  into 
which  it  is  divided. 

Special  clauses  are  provided  for  irrigation  and  mining  companies. 
§§  1092,  1096,  1097. 

Filing  and  Recording.  The  articles  of  incorporation  are  filed  in 
the  office  of  the  Secretary  of  the  Territory,  who  issues  a certificate 
over  the  Great  Seal  of  the  Territory  that  the  articles  with  the 
required  statement  of  facts  have  been  filed  (§  947),  and  also  records 
the  articles  in  the  “ Book  of  Corporations.”  § 948.  A certified  copy 
of  the  articles  issued  by  said  Secretary  is  prima  facie  evidence  of  the 
facts  therein  stated  and  of  corporate  existence.  § 949. 

4.  Organization. 

First  Meetings.  The  first  meeting  of  stockholders  must  be  held 
within  the  Territory  (§  974),  not  more  than  one  month  after  incorpor- 
ation, for  the  adoption  of  by-laws.  These  must  be  adopted  by  a 
majority  vote  of  the  subscribed  capital  stock  at  a meeting  called  on 
two  weeks’  notice  in  a newspaper  published  in  the  county  where  the 
principal  place  of  business  is  located,  or  if  none  there,  in  an  adjoining 
county.  This  first  meeting  may,  however,  be  dispensed  with  and 
by-laws  be  adopted  by  written  assent  of  two-thirds  of  the  stock.  § 962. 

At  this  first  stockholders’  meeting,  or  at  such  subsequent  meeting 
as  may  then  be  appointed,  directors  are  elected  to  supersede  those 
named  in  the  articles  of  incorporation  (§  943),  and  to  hold  office  for 
one  year  or  until  their  successors  are  elected  and  qualified.  § 966. 
Immediately  after  their  election  the  directors  must  organize  by  the 
election  of  a president  from  their  number,  a secretary  and  a treas- 
urer. § 969. 

By-Laws.  Must  be  adopted  within  one  month  after  incorpora- 
tion and  may  provide:  (1)  Time,  place  and  manner  of  calling  and 
conducting  meetings.  (2)  Number  of  stockholders  or  members  con- 
stituting a quorum.  (3)  Mode  of  voting  by  proxy.  (4)  Time  of 
annual  election  of  directors;  mode  and  manner  of  notice  thereof. 
(5)  Compensation  and  duties  of  officers.  (6)  Manner  of  election  and 
tenure  of  office  of  officers  other  than  directors.  (7)  Suitable  penalties 
for  violations  of  by-laws,  not  exceeding  $100  for  any  one  offence. 

§ 963.  By-laws  may  also  provide  for  transfer  of  stock.  § 961. 

The  by-laws  must  be  certified  by  a majority  of  the  directors  and 
the  secretary,  and  be  copied  in  a “ Book  of  By-Laws,”  and  are  not 


OKLAHOMA. 


327 


effective  until  so  copied.  Power  to  make  by-laws  may  be  delegated 
to  the  directors  by  a two-thirds  vote  of  the  stock  or  members,  always 
subject  to  their  repeal  and  control.  § 964. 

Certificates.  None  required  to  show  completed  organization. 


5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  of  incorporation 
by  Secretary  of  Territory.  § 947.  Of  mining,  manufacturing  and 
other  industrial  corporations,  is  limited  to  twenty  years.  § 1084.  Of 
corporations  not  specifically  limited  by  the  statutes,  it  may  be  per- 
petual. § 961.  May  be  questioned  only  at  suit  of  Territory  and  never 
collaterally.  § 933. 

Beginning  Business.  Business  may  be  commenced  forthwith  and 
must  be  begun  within  one  year.  § 981.  Mining,  manufacturing  and 
industrial  corporations  must  commence  construction  of  their  works 
within  ninety  days  from  the  date  of  issue  of  certificate  of  incorpora- 
tion, and  must  complete  the  same  within  two  years.  § 1099. 

Renewal.  No  provision. 

Forfeiture  of  Charter.  Occurs  on  failure  to  commence  business 
within  two  years.  § 981. 

Dissolution.  May  be  had  voluntarily  by  application  to  court 
showing  consent  of  two-thirds  of  the  stockholders  and  payment  of  all 
corporate  debts.  § 980.  Involuntary  dissolution  is  provided  for. 
§§  980-984. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 961. 

To  Hold  Property.  This  power  is  limited  to  such  property  as 
the.  legitimate  purposes  of  the  corporation  may  require.  § 961. 

Its  Own  Stock.  Unless  otherwise  provided,  a corpora- 
tion may  purchase  from  its  surplus  profits,  and  hold  and  transfer  its 
own  stock  at  any  time,  or  may  purchase  its  stock  in  case  there  is  no 
bidder  at  sales  for  non-payment  of  assessments  (§  997),  or  by  unani- 
mous consent  in  writing  of  all  the  stockholders  at  such  price  as  they 
may  agree  on.  § 959.  Such  stock  is  non-assessable  and  non-dividend 
bearing  (§  997),  and  is  held  subject  to  the  control  of  the  stockholders, 
a majority  of  the  remaining  shares  being  a majority  of  the  stock  for 
all  purposes  of  voting.  § 998. 

Stock  of  Other  Corporations.  No  statutory  provisions. 

To  Borrow  Money.  The  corporate  debts  must  at  no  time  exceed 
the  subscribed  capital  stock.  § 970;  Rogers  v.  Bonnett,  2 Okl.  543; 
37  Pac.  1075. 

To  Do  Business  in  Other  States.  Mining,  manufacturing  and 
other  industrial  corporations  may  provide  in  their  articles  of  incor- 


328 


CLASSIFIED  CORPORATION  LAWS. 


poration  for  having  a business  office  without  the  Territory,  at  any 
place  within  the  United  States,  and  may  hold  any  meeting  of  the 
stockholders  or  directors  at  such  office,  always  maintaining  their  main 
office,  designated  in  the  articles,  within  the  Territory.  § 1090. 

Consolidation  or  Merger.  Is  provided  for  only  between  railroad 
corporations.  § 1028. 

Amendment  of  Charter.  May  be  made  by  a two-thirds  vote  of 
the  stock  to  include  anything  which  might  have  been  inserted  origi- 
nally and  is  accomplished  (except  for  increase  of  capital  stock)  by 
filing  “Amended  Articles  of  Incorporation,”  executed  by  all  the  di- 
rectors and  officers  of  the  corporation,  and  filing  and  recording  same 
as  in  the  case  of  original  incorporation.  § 945.  (See  “ Increase  of 
Stock  ” under  § 7.) 

7.  Capital  Stock. 

Amount.  Must  be  stated  in  articles  of  incorporation.  § 943.  No 
restrictions. 

Initial  Payment.  Is  not  specified. 

i 

Consideration  for  Issue.  No  statutory  provision.  Assessments 
may  be  levied  by  the  directors  after  one-fourth  of  the  capital  stock 
has  been  subscribed.  §§  985-1005. 

Increase  or  Decrease.  May  be  had  on  two-thirds  vote  of  entire 
stock,  at  meeting  called  for  that  purpose  by  the  directors,  on  notice 
stating  the  amount  to  which  it  is  proposed  to  increase  or  decrease 
the  capital  stock,  such  notice  to  be  served  personally  and  published 
once  a week  for  four  weeks  in  a newspaper  in  the  county  of  the 
principal  place  of  business.  A certificate  thereof,  signed  by  the  chair- 
man and  secretary  of  the  meeting  and  a majority  of  the  directors, 
must  be  filed  and  recorded  with  the  Secretary  of  the  Territory. 
Written  assent  of  three-fourths  of  the  subscribed  stock  is  effectual 
without  a meeting.  No  reduction  of  capital  stock  to  less  than  the 
corporate  indebtedness  or. cost  of  proposed  works  is  allowed.  § 978. 

Classes  of  Stock.  No  provision. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Must  be  issued  for  fully  paid  stock  and  be 
signed  by  the  president  and  secretary.  By-laws  may  provide  for 
issuance  before  full  payment,  under  such  restrictions  and  for  such 
purposes  as  may  be  prescribed.  § 957. 

Transfer  of  Stock.  May  be  had  by  endorsement  and  delivery  of 
certificate,  but  no  such  transfer  is  valid  except  as  between  the  parties 
until  entered  on  the  books  of  the  corporation,  such  entry  showing 
the  names  of  the  parties,  the  number  of  shares  and  the  date  of  trans- 
fer. § 957.  In  case  of  non-resident  transferees  proof  may  be  required 
and  also  bond.  § 977. 


OKLAHOMA. 


329 


8.  Stockholders. 

Rights  and  Powers.  Two-thirds  vote  controls  amendments,  re- 
moval of  directors,  increase  and  decrease  of  stock,  etc.  §§  978,  945, 
972.  Three  stockholders  may  compel  meetings  for  elections  by  appli- 
cation to  justice  of  the  peace.  § 974. 

Liability.  A stockholder  is  liable  to  the  extent  of  amount  unpaid 
on  his  stock.  Actions  may  be  brought  against  stockholders  holding 
unpaid  stock,  jointly  or  severally,  and  the  court  is  to  determine 
amount  due  from  each,  and  a several  judgment  is  rendered  against 
each  in  conformity  therewith.  Liability  is  not  released  by  transfer  of 
unpaid  stock.  § 975.  Stockholders  of  mining,  manufacturing  and 
industrial  corporations  are  jointly  and  severally  liable  for  all  claims 
of  employees  of  the  corporation,  after  execution  against  corporation 
is  returned  unsatisfied,  action  to  be  brought  within  four  months. 
§ 1087. 

Meetings.  Must  be  held  at  the  office  or  principal  place  of  busi- 
ness within  the  Territory  (§  974),  but  mining,  manufacturing  and 
industrial  corporations  may  hold  stockholders’  meetings  without  the 
Territory  if  so  provided  in  the  articles  of  incorporation.  § 1090.  If 
no  time  is  specified  in  by-laws  for  annual  election,  it  must  be  held 
on  the  first  Tuesday  in  June.  § 965. 

Notice.  Should  be  prescribed  by  by-laws.  § 963.  May  be  waived 
when  all  are  present  and  sign  written  consent  on  the  record.  § 976. 
In  an  emergency,  meetings  may  be  called  on  warrant  of  a justice  of 
the  peace  issued  on  application  of  three  stockholders.  § 974. 

Quorum.  Is  a majority  of  the  subscribed  stock.  § 973. 

Voting.  At  elections  voting  is  to  be  by  ballot,  each  share  having 
one  vote,  and  a majority  electing.  § 967.  Voting  may  be  in  person 
or  by  proxy.  Shares  must  have  stood  in  the  name  of  the  voter  on 
the  stock  books  of  the  corporation  at  least  ten  days  prior  to  the 
meeting.  § 973. 

9.  Directors. 

Number.  Must  be  not  less  than  three  nor  more  than  eleven. 
§ 968.  They  may  be  removed  by  a two-thirds  vote  of  the  stock.  § 972. 

Qualifications.  Directors  must  be  stockholders  to  such  amount 
as  the  by-laws  may  prescribe  (§  968),  and  one-third  must  be  residents 
of  the  Territory.  § 938. 

Powers.  They  control  the  corporate  business  and  property. 
§ 968.  They  may  fill  vacancies  on  the  board  unless  otherwise  pro- 
vided by  the  by-laws.  Id.  They  continue  as  trustees  on  dissolution 
unless  other  persons  are  appointed  by  court.  § 982. 

Liability.  For  illegal  dividends  and  division  of  capital  stock  they 
are  jointly  and  severally  liable  for  corporate  debts,  in  case  of  disso- 
lution, to  the  extent  of  such  dividend  or  division  and  there  is  no  limit 
of  time  as  to  bringing  of  action  to  enforce  same.  They  are  also  liable 
for  permitting  corporate  debts  to  exceed  subscribed  capital  stock. 
§ 970.  There  are  special  liabilities  for  directors  of  mining,  etc.,  com- 
panies. §§  1085,  1091.  Officers  are  liable  for  all  damages  resulting 


330 


CLASSIFIED  CORPORATION  LAWS. 


from  false  reports,  public  notices  or  entries.  § 971.  Penal  provisions 
also  exist  for  frauds.  §§  2542-2563.  Directors  are  deemed  to  have 
knowledge  of  acts  of  the  board,  and  any  director  will  be  held  liable 
therefor  unless  he  causes  his  dissent  to  be  entered  on  the  corporate 
records,  if  he  remains  a director  for  six  months  thereafter.  §§  2559- 
2561. 

Meetings.  Directors’  meetings  of  mining,  manufacturing  and  in- 
dustrial corporations  may  be  held  within  or  without  the  Territory  if 
so  provided  in  the  articles  of  incorporation.  § 1090.  If  no  other 
provision  is  made  by  the  by-laws,  meetings  must  be  called  by  special 
notice  to  each  director  in  writing,  by  the  secretary,  at  the  order  of 
the  president,  or  on  the  order  of  any  two  directors.  § 974.  A quorum 
is  a majority.  §§  968,  969. 

Executive  Committee.  No  specific  provisions.  May  be  appointed 
under  the  general  powers  granted  corporations.  §§  961-963. 

10.  Officers. 

A president,  who  must  be  a director,  a secretary  and  a treasurer 
are  prescribed,  duties  to  be  provided  by  by-laws.  § 969.  One-third 
of  the  officers  must  be  residents  of  the  Territory.  § 938. 

11.  Principal  Office. 

Mining,  manufacturing  and  industrial  corporations,  which  are 
permitted  to  have  an  office  and  do  business  without  the  Territory, 
must  maintain  their  main  offices  within  the  Territory,  such  office  to 
be  designated  in  the  articles  of  incorporation.  § 1090. 

12.  Corporate  Books. 

What  Required.  A “ Book  of  By-Laws  ” is  specified  (§  964)  and 
a record  of  all  business  transactions;  a journal  of  all  meetings  of 
directors  and  stockholders,  giving  full  details  and  stating  every  act 
done  or  ordered  to  be  done,  who  were  absent  and  who  present, 
ayes  and  nays,  if  requested,  the  entrance  and  exit  of  any  member  if 
requested  and  protests  to  any  action  in  full.  Also  a “ Stock  and 
Transfer  Book  ” containing  an  alphabetical  record  of  all  stockholders, 
instalments  paid  and  unpaid,  assessments  levied,  and  paid  or  unpaid; 
all  transfers,  with  date  and  by  and  to  whom,  and  any  other  facts 
required  by  the  by-laws.  §§  979.  Regular  books  of  account  and 
vouchers  of  mining,  etc.,  corporations  must  be  kept.  § 1086. 

Where  Kept.  Not  specified. 

Examination  of.  The  by-laws  are  open  to  the  inspection  of  the 
public  during  business  hours  of  each  day  except  holidays.  § 964. 
The  other  books  and  records  required  by  the  statutes  are  open  to 
the  inspection  of  directors,  stockholders  and  creditors.  §§  979,  1086. 
As  often  as  once  a year  a statement  of  such  accounts  shall  be  laid 
before  the  stockholders.  § 1086.  On  written  request  of  owners  of 
twenty  per  cent,  of  the  stock,  the  treasurer  must  make  a sworn  state- 
ment of  the  corporate  affairs,  or  any  desired  part  thereof,  and  deliver 
within  twenty  days,  and  also  keep  the  same  on  file  in  his  office  for 
six  months  for  inspection  of  any  stockholder  demanding  the  same. 


OKLAHOMA. 


331 


Such  statement  may  be  required  to  be  renewed  every  six  months. 

§ 1089. 

13.  Reports. 

Any  mining,  manufacturing  or  industrial  corporation  must  an- 
nually, within  twenty  days  from  January  1st,  make  a report  and  pub- 
lish it  in  a newspaper  at  or  nearest  to  its  place  of  business,  stating 
the  capital  stock,  amount  thereof  actually  paid  in,  amount  and  nature 
of  its  indebtedness,  and  amounts  due  the  corporation,  number  and 
amount  of  dividends  and  when  paid,  and  net  profits.  This  is  signed 
by  the  president  and  a majority  of  the  directors,  and  verified  by  the 
president  and  secretary  under  the  corporate  seal  and  filed  with  the 
Register  of  Deeds  of  the  county  where  such  business  is  carried  on. 
Neglect  to  file  such  report  is  a misdemeanor.  § 1088. 

Publication  is  required  of  annual  reports  of  mining,  manufactur- 
ing and  other  industrial  corporations.  § 1088.  Notices  of  meetings 
may  always  be  avoided  by  written  consent  (§  978)  or  waiver.  § 976. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  foreign  corporation  shall 
transact  business  or  hold  property  within  the  Territory  until  it  has 
filed  with  the  Territorial  Secretary,  a duly  authenticated  copy  of  its 
charter  or  articles  of  incorporation,  which  is  recorded  by  him  (§§  1225, 
1226),  and  a duly  authenticated  copy  of  the  appointment  or  commis- 
sion of  an  agent,  residing  at  some  accessible  point  in  the  Territory, 
in  the  county  in  which  the  principal  business  of  the  corporation  is 
carried  on,  authorizing  him  to  accept  service  of  process  against  the 
corporation.  This  appointment  or  authorization  is  also  filed  and  re- 
corded in  the  office  of  the  Register  of  Deeds  of  the  county  where 
such  agent  resides.  § 1227. 

Penalties  for  Non-Compliance.  None  prescribed.  For  violation 
of  anti-trust  law,  foreign  corporations  forfeit  right  to  do  business  in 
the  Territory  (§  6740),  and  the  penal  statutes  against  corporate  offi- 
cers, etc.,  apply.  §§  2562,  2542-2563. 

Taxation.  No  special  provisions.  § 5915. 

Books.  Reports.  No  requirements. 

Attachments  Against.  Lie  against  as  a foreign  corporation,  when 
cause  of  action  arose  wholly  within  the  Territory  (§  4365),  and  with- 
out bond.  §§  4367,  4376. 

15.  Combinations  and  Monopolies. 

To  create,  enter  into,  become  a member  of  or  party  to  any  pool, 
trust,  agreement,  combination  or  understanding,  to  regulate  or  fix 
prices  of,  or  prevent  or  restrict  competition  in  sale  of  provisions, 
feed,  fuel,  lumber  or  other  building  materials,  articles  of  merchandise 
or  other  commodity,  is  a misdemeanor,  in  individuals  punishable  by 
fine  of  from  $50  to  $500  (§  6739),  and  in  corporations  (including  the 
fixing  of  rate  of  interest)  is  punished  by  forfeiture  of  corporate  rights 
and  franchises  in  the  Territory.  § 6740.  Purchasers  from  any 
offender  against  this  law  shall  not  be  liable  for  the  price,  but  may  sue 
for  damages.  Evidence  is  facilitated  and  prosecuting  attorney  allowed 
one-fifth  of  recovery,  in  addition  to  fees  and  salary.  §§  6741-6743. 


OREGON. 


1.  Corporation  Laws.* 

Constitution.  (1859.)  Corporations  to  be  formed  under  general 
laws.  Art.  XI,  § 2.  Stockholders’  liability  limited  to  unpaid  sub- 
scriptions. Id.,  §3.  State  ownership  or  interest  in  any  corporation 
prohibited.  Id.,  § 6. 

Statutes.  The  general  corporation  law  is  found  in  Bellinger  & 
Cotton’s  Annotated  Codes  and  Statutes  (1902),  Title  XLI,  with 
amendments  in  L.  1903  and  1905.  Chapter  I of  the  Codes  and 
Statutes  provides  for  the  formation  of  private  corporations  “ for  the 
purpose  of  engaging  in  any  lawful  enterprise,  business,  pursuit  or 
occupation  ” (§5052);  Chapter  II  relates  to  appropriation  of  land  for 
corporate  purposes,  Chapter  III  to  foreign  corporations,  and  the  re- 
maining Chapters,  IV  to  VII,  to  railroad,  building  and  loan,  religious, 
charitable,  educational,  and  cemetery  corporations.  Special  titles  pro- 
vide for  promotion  and  protection  of  industrial  pursuits,  agricultural 
societies,  trade  and  commerce,  public  improvements,  including  high- 
ways, telegraph,  irrigation,  etc.,  and  water  rights. 

2.  Taxes  and  Fees. 

Organization  Expenses.  Organization  fee  to  Secretary  of  State 
on  filing  articles  of  incorporation:  On  capital  stock  not  exceeding 

$5,000,  $10;  not  exceeding  $10,000,  $15;  not  exceeding  $25,000,  $20; 
not  exceeding  $50,000,  $25;  not  exceeding  $100,000,  $35;  not  exceeding 
$250,000,  $45;  not  exceeding  $500,000,  $60;  not  exceeding  $1,000,000, 
$75;  not  exceeding  $2,000,000,  $90;  exceeding  $2,000,000,  $100.  This 
includes  filing  and  recording.  L.  1903,  pp.  40,  41.  The  annual  license 
fee  for  the  fraction  of  the  fiscal  year  to  July  1st  next  succeeding  must 
also  be  paid.  Id.,  p.  44. 

Fees  to  County  Clerk  for  recording,  10  cents  per  folio;  25  cents 
for  certificates.  § 3020. 

Franchise  Tax.  Within  thirty  days  after  July  15th  of  each  year, 
every  business  corporation,  domestic  or  foreign,  except  mining  (L. 
1905,  Ch.  214),  must  pay  an  annual  license  fee  to  the  State  Treasurer 
in  proportion  to  its  authorized  capital  stock,  as  follows:  Not  exceed- 
ing $5,000,  $10;  not  exceeding  $10,000,  $15;  not  exceeding  $25,000,  $20; 
not  exceeding  $50,000,  $30;  not  exceeding  $100,000,  $50;  not  exceeding 
$250,000,  $70;  not  exceeding  $500,000,  $100;  not  exceeding  $1,000,000, 
$125;  not  exceeding  $2,000,000,  $175;  exceeding  $2,000,000,  $200.  L. 
1903,  pp.  43,  44.  Mining  companies  filing  annual  report  showing  an- 

* Sections  given,  unless  otherwise  noted,  are  of  Bellinger  & Cotton’s  Annotated 
Codes  and  Statutes  (1902). 


332 


OREGON. 


333 


nual  output  not  exceeding  $1,000  pay  an  annual  fee  of  $10  regardless 
of  capitalization.  L.  1905,  Ch.  214. 

Local  Taxation.  Shares  of  corporations  which  are  taxed  on 
their  capital  are  not  taxed  in  the  hands  of  stockholders.  § 3055. 

General.  On  increase  of  capital  stock,  the  fee  on  increase  is  the 
same  as  for  an  original  incorporation.  L.  1903,  p.  42.  Fee  on  filing 
certificate  of  decrease  of  capital  stock  or  of  dissolution  or  for  supple- 
mentary articles,  $5.  Id.,  pp.  42,  43. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 5052.  No  requirements 
as  to  residence. 

Articles  of  Incorporation.  Are  subscribed  and  acknowledged  in 
triplicate  by  the  incorporators,  and  must  specify  (§  5055)  : 

(1)  Name  of  corporation.  Must  not  so  closely  resemble 
that  of  an  existing  corporation  that  in  the  opinion  of  the 
Secretary  of  State  it  will  lead  to  confusion.  L.  1903,  p.  41. 
May  be  changed  by  amendment.  § 5073. 

(2)  Duration,  if  limited. 

(3)  Enterprise  or  business  in  which  it  proposes  to  engage. 

(4)  Place  where  it  proposes  to  have  its  principal  office  or 
place  of  business.  Must  be  within  State. 

(5)  Amount  of  capital  stock.  No  limitations. 

(6)  Amount  of  each  share.  No  restrictions. 

Filing  and  Recording.  One  copy  of  the  articles  of  incorporation 
is  filed  and  recorded  with  the  Secretary  of  State,  one  in  the  office  of 
the  clerk  of  the  county  in  which  the  business  is  carried  on  or  the 
principal  office  is  located,  and  one  is  retained  by  the  corporation. 
§ 5053-  On  payment  of  the  fees  and  taxes,  the  Secretary  of  State 
issues  certificate  stating  facts  contained  in  the  articles,  date  of  filing 
and  fees  paid.  L.  1903,  p.  40. 

4.  Organization. 

First  Meetings.  The  incorporators  are  to  open  books  for  stock 
subscriptions,  and  first  meeting  of  subscribers  for  election  of  not  less 
than  three  directors  may  be  called  when  one-half  the  capital  stock 
has  been  subscribed.  § 5057.  Such  meeting  may  be  attended  by 
proxy.  § 5058.  Notice  must  be  published  thirty  days,  once  each 
week,  unless  all  subscribers  are  present  and  waive  notice.  § 5061. 

The  incorporators  are  inspectors  of  election  at  first  meeting,  cer- 
tify who  are  elected  directors  and  appoint  time  for  the  first  directors’ 
meeting.  After  the  first  election  shares  on  which  any  instalment  or 
portion  thereof  remains  due  and  unpaid  are  not  permitted  to  vote. 

§ 5058. 

By-Laws.  Are  adopted  by  stockholders.  May  provide  for  the 
transfer  of  stock,  for  the  management  of  property  and  business  of  the 


334 


CLASSIFIED  CORPORATION  LAWS. 


corporation,  and  for  sale  of  stock  for  delinquent  assessments  on  thirty- 
days’  notice.  § 5056. 

Certificates.  None  are  required  to  show  completed  organization, 
but  annual  report  must  be  filed  in  June,  giving  names  and  addresses 
of  officers  and  all  facts  about  payment  and  issuance  of  capital  stock. 
L.  1903,  p.  43. 

5.  Corporate  Existence. 

When  Commenced.  On  completed  filing  of  articles  of  incorpora- 
tion. § 5056.  May  be  unlimited.  § 5055.  Continues  five  years  after 
dissolution  for  the  purpose  of  settling  affairs.  $ 5068. 

Beginning  Business.  Business  may  be  commenced  when  one-half 
of  the  capital  stock  has  been  subscribed  (§5057),  and  must  be  begun 
within  one  year  from  the  date  of  filing  the  articles.  § 5067. 

Renewal.  Not  provided  for,  the  law  contemplating  perpetual 
existence. 

Forfeiture  of  Charter.  Occurs  on  failure  to  organize  and  com- 
mence business  for  one  year,  and  on  neglect  to  carry  on  the  same  for 
any  period  of  six  months  thereafter.  § 5067.  The  fact  that  a tax  or 
fee  legally  due  from  a corporation  has  not  been  paid,  may  be  inter- 
posed at  any  time  before  trial  as  a defence  in  any  action  brought  by 
a corporation.  L.  1903,  p.  49. 

Dissolution.  May  be  effected  by  a vote  of  the  majority  of  the 
stock.  § 5070.  A certificate  sworn  to  by  the  secretary,  under  the 
corporate  seal,  must  be  filed  with  the  Secretary  of  State,  setting  forth 
the  facts.  L.  1903,  p.  41.  Secretary  of  State  issues  certificate  of  dis- 
solution. Id.,  p.  42. 

6.  Corporate  Powers. 

General.  General  powers  are  enumerated.  § 5056. 

To  Hold  Property.  This  power  is  conferred  to  the  extent  of 
corporate  necessities.  § 5056. 

Its  Own  Stock.  On  organizing,  corporation  can  not 
subscribe  for  its  own  stock.  Holladay  v.  Elliott,  8 Or.  84  (1880). 

Stock  of  Other  Corporations.  The  power  is  fully  con- 
ferred. L.  1903,  p.  212. 

To  Borrow  Money.  No  express  limitations.  Silsby  v.  Strong, 
38  Or.  39,  41  (1900). 

To  Do  Business  in  Other  States.  Mining  companies  are  express- 
ly given  this  power  to  the  extent  of  having  offices  and  officers  and 
holding  directors’  meetings  without  the  State,  but  on  express  condi- 
tion of  maintaining  office  within  the  State  with  an  agent  or  officer 
in  charge.  L.  1905,  Ch.  190.  (See  §11,  “ Principal  Office.”) 

Consolidation  or  Merger.  No  statutory  provisions. 


OREGON. 


335 


Amendment  of  Charter.  Amendments  are  made  by  filing  and 
recording  supplementary  articles  in  same  manner  as  original  articles 
of  incorporation,  with  publication  of  notice  of  filing.  §§  5070,  5°73i 
L.  1903,  pp.  42,  43.  Capital  stock  or  general  place  of  business  may  be 
changed  by  majority  vote.  §§  5070,  5072.  The  primary  objects  or 
purposes  stated  in  the  articles  of  incorporation  may  be  changed  by 
adding  any  business  cognate  or  germane  thereto,  or  the  corporate 
name  may  be  changed,  on  a three-fourths  vote  of  all  the  subscribed 
stock.  To  engage  in  any  new  enterprise  or  pursuit,  a seven-eighths 
vote  is  necessary.  The  directors  must  cause  notice  of  the  filing  of 
supplementary  articles  to  be  published,  setting  forth  the  object  of 
the  same.  § 5073. 

7.  Capital  Stock. 

Amount.  Not  limited  by  law  but  must  be  stated  in  articles  of 
incorporation.  § 5055. 

Initial  Payment.  Is  not  specified,  but  one-half  of  the  authorized 
stock  must  be  subscribed  before  organization.  § 5057. 

Consideration  for  Issue.  Corporations  are  authorized  to  purchase 
real  or  personal  property,  including  stock  of  any  other  corporation, 
and  issue  in  payment  full  paid  stock  to  the  amount  thereof.  In  the 
absence  of  actual  fraud  the  judgment  of  the  directors  as  to  value  is 
conclusive.  Stock  so  issued  to  be  reported  according  to  the  facts. 
L.  1903,  p.  212. 

Assessments  are  governed  by  by-laws.  Sale  for  delinquent  as- 
sessments may  be  had  on  thirty  days’  notice  of  time  and  place,  pub- 
lished in  newspaper  in  circulation  in  the  neighborhood  of  such  com- 
pany. § 5056.  Assessments  can  not  be  levied  until  one-half  of  the 
capital  stock  has  been  subscribed.  Willamette,  etc.  Co.  v.  Stannus, 
4 Or.  262;  Coyote,  etc.  Co.  v.  Ruble,  8 Or.  284  (1880). 

Increase  or  Decrease.  May  be  had  by  a vote  of  the  majority  of 
the  stock.  Certificate  must  be  filed  by  the  secretary  of  the  corpora- 
tion with  the  Secretary  of  State,  under  the  corporate  seal,  with  a full 
copy  of  the  resolutions  authorizing  the  same  and  a statement  that 
such  change  was  adopted  by  a vote  of  the  majority  of  the  stock  at 
a meeting  duly  called  for  that  purpose.  § 5070;  L.  1903,  p.  41.  On 
payment  of  prescribed  fees,  Secretary  of  State  issues  certificate  of 
filing.  Id.,  p.  42. 

Classes  of  Stock.  No  provisions. 

Par  Value  of  Shares.  Not  prescribed  but  is  to  be  stated  in  ar- 
ticles of  incorporation,  and  may  be  changed  in  same  manner  as  change 
of  capital  stock  is  accomplished.  § 5070;  L.  1903,  pp.  41,  42. 

Stock  Certificates.  Are  not  prescribed  as  to  form  or  contents. 

Transfer  of  Stock.  Is  to  be  regulated  by  by-laws  (§  5056),  and 
does  not  relieve  transferee  from  liability  for  any  unpaid  balance. 
§ 5065. 


336 


CLASSIFIED  CORPORATION  LAWS. 


8.  Stockholders. 

Rights  and  Powers.  By  a majority  vote,  capital  stock  or  general 
place  of  business  may  be  changed  (§§  5070,  5072)  and  dissolution 
effected.  § 5070;  L.  1903,  p.  41.  Change  of  name  requires  a three- 
fourths  vote,  as  do  additions  to  primary  objects.  To  engage  in  new 
enterprise  or  pursuit  requires  seven-eighths  vote.  § 5073. 

Liability.  Stockholders  are  liable  for  corporate  debts  only  to  the 
extent  of  their  unpaid  stock.  Const.,  Art.  XI,  § 3.  On  voluntary  sale 
of  stock,  seller  remains  liable  for  such  unpaid  balance,  unless  the 
same  be  paid  by  the  purchaser.  § 5065.  Enforceable  only  after  judg- 
ment against  corporation  and  execution  returned  nulla  bona.  Hodges 
v.  Co.,  9 Or.  200  (1881). 

Meetings.  Must  be  held  within  the  State  in  the  absence  of  statu- 
tory authority  otherwise.  Are  to  be  held  annually  for  election  of  direc- 
tors, and  after  the  first  election,  the  president  acts  as  inspector  of 
election.  § 5062. 

Notice.  Is  to  be  prescribed  by  directors  but  may  be  waived  oil 
record.  § 5061. 

Quorum.  No  provision.  Should  be  prescribed  by  by-laws. 

Voting.  Each  share  has  one  vote,  and  no  share  may  be  voted 
on  which  any  instalment  Or  portion  thereof  remains  unpaid.  § 5058. 

Proxies.  Voting  by  proxy  is  permitted.  § 5058. 

9.  Directors. 

Number.  Must  be  not  less  than  three.  § 5057. 

Qualifications.  They  must  be  stockholders.  They  cease  to  be 
directors  when  they  cease  to  be  stockholders.  A majority  of  the 
directors  must  be  residents  of  the  State  (of  mining  companies  only 
one  [L.  1905,  Ch.  190]),  and  each  of  them  must  take  and  subscribe  an 
oath  of  office.  § 5059.  They  are  not  entitled  to  compensation  unless 
authorized  by  vote  or  by-laws  before  the  services  were  rendered. 
Wood  v.  Co.,  23  Or.  20  (1890). 

Powers.  They  have  no  unusual  powers.  Their  judgment  as  to 
value  of  property,  etc.,  taken  in  payment  of  stock,  is  conclusive  in  the 
absence  of  fraud.  L.  1903,  p.  212. 

Liability.  For  declaring  and  paying  any  dividend  when  the  com- 
pany is  insolvent,  or  which  would  render  it  insolvent  or  diminish  its 
capital  stock,  the  directors  are  jointly  and  severally  liable  for  cor- 
porate debts  then  existing  or  incurred  while  they  remain  in  office. 
For  fraudulently  obtaining  credit  for  the  corporation  they  are  person- 
ally liable  to  the  person  injured.  Dissenting  or  absent  directors 
exempt  themselves  from  liability  by  filing  objections.  § 5066.  Penal 
provisions  also  exist.  §§  1838-9. 

Meetings.  Must  be  held  within  the  State  except  of  mining  cor- 
porations actually  engaged  in  mining  operations.  _ L.  1905,  Ch.  190. 
A majority  is  a quorum  unless  a lesser  number  is  specified  by  the 


OREGON. 


337 


by-laws,  in  which  case  a certificate  of  such  fact  must  be  filed  with 
the  Secretary  of  State  and  County  Clerk.  § 5062. 

Executive  Committee.  No  provisions. 

10.  Officers. 

A president,  who  must  be  a director,  is  prescribed,  and  a secre- 
tary, who  shall  keep  a correct  record  of  the  corporate  business. 
§ 5060.  A treasurer  is  also  contemplated  by  the  statutes.  L.  1903, 
P-  43- 


11.  Principal  Office. 

Must  be  maintained  in  the  State  and  be  named  in  the  articles  of 
incorporation.  § 5055.  May  be  changed  by  a majority  vote  of  the 
stock.  § 5072.  Mining  companies  permitted  to  have  offices  without 
the  State  must  maintain  an  office  within  the  State,  and  unless  the 
president  is  a resident  of  the  State,  must  have  an  agent,  residing  in 
the  county  of  the  principal  office,  on  whom  process  may  be  served; 
and  must  include  in  their  annual  statements  the  name  and  residence 
of  such  agent.  L.  1905,  Ch.  190. 

12.  Corporate  Books. 

What  Required.  The  secretary  is  to  keep  a record  of  the  official 
business  of  the  corporation.  § 5060.  Every  corporation  must  keep 
a stock  book  to  show  intelligently  the  original  stockholders,  their 
respective  shares,  amounts  paid,  amount  due  thereon  and  all  transfers. 
§ 5063. 

Where  Kept.  Obviously  at  the  principal  office  in  the  State. 

Examination  of.  The  stock  book  or  a certified  copy  thereof  as  to 
the  items  above  stated,  as  well  as  all  other  books  of  the  corporation 
necessary  for  carrying  on  its  business,  shall  be  subject  to  the  inspec- 
tion at  all  reasonable  hours  of  any  person  interested  therein  and 
applying  therefor.  § 5063. 

13.  Reports. 

Business  corporations  must  during  the  month  of  June  in  each 
year,  furnish  to  the  Secretary  of  State,  on  blanks  furnished  by  him, 
a statement  sworn  to  by  an  officer  (or  authorized  agent  of  a foreign 
corporation),  setting  forth  corporate  name,  location  of  principal  office, 
name  of  president,  secretary  and  treasurer,  with  post-office  address 
of  each,  date  of  annual  election  of  directors  and  officers,  amount  of 
authorized  capital  stock,  number  of  shares  and  par  value  of  each, 
amount  of  capital  stock  subscribed,  amount  issued,  and  amount  paid, 
specifying  amount  paid  in  property.  L.  1903,  p.  212.  Foreign  cor- 
porations and  mining  corporations  having  offices  without  the  State 
must  also  state  name  and  post-office  address  of  State  agent.  L.  1903, 
p.  43;  L.  1905,  Ch.  190.  Mining  companies  may  include  in  this  report 


338 


CLASSIFIED  CORPORATION  LAWS. 


(Oregon) 

a statement  in  general  terms  of  the  amount  of  work  done  and  im- 
provements made  since  last  annual  report,  with  the  value  of  the 
output  or  product  of  their  mines  from  January  ist  to  December  31st 
of  the  preceding  year,  and  a statement  that  they  are  not  engaged  in 
any  other  business  than  mining.  Such  companies  are  exempt  from 
annual  license  tax — above  $10 — if  such  output  does  not  exceed  $1,000. 
L.  1905,  Ch.  214. 

Publication  is  required  of  notice  of  filing  of  supplementary  arti- 
cles of  incorporation,  for  change  of  name  or  change  of  business. 
§ 5073. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation  be- 
fore transacting  business  in  the  State,  must  file  with  the  Secretary  of 
State  a declaration  of  its  desire  to  so  engage  in  business,  setting  forth 
full  name  under  which  it  proposes  to  transact  business;  name  of  the 
state  or  country  under  whose  laws  it  was  organized;  location  of  its 
home  office;  date  of  its  formation;  amount  of  capital  stock;  nature 
of  pursuit  or  business  in  which  it  is  authorized  to  engage;  location 
of  principal  office  in  the  State;  name  of  its  attorney  in  fact  in  State; 
names  and  addresses  of  its  principal  officers  and  of  its  directors,  and 
the  name  and  residence  of  its  general  agent  in  the  State.  Declaration 
must  be  accompanied  by  certified  copy  of  charter  or  articles  of  in- 
corporation, duly  authenticated  by  the  State  or  Government  authori- 
ties. §7;  L.  1903,  pp.  39,  44,  46. 

Also  a duly  executed  power  of  attorney  must  be  similarly  filed, 
appointing  a citizen  of  the  United  States  and  a resident  of  the  State 
its  attorney  in  fact  on  whom  process  may  be  served.  § 6.  On  pay- 
ment of  fee  of  $50  and  the  annual  license  fee  for  the  succeeding  frac- 
tion of  the  fiscal  year  (to  July  ist),  the  Secretary  of  State  issues  a 
certificate  of  authority.  L.  1903,  pp.  46,  47. 

Penalties  for  Non-Compliance.  Inability  to  maintain  suits.  L. 
1903,  pp.  47,  48.  O11  failure  to  maintain  attorney  in  fact,  service  may 

be  made  on  Secretary  of  State.  Id.,  p.  45. 

Taxation.  Same  annual  license  fee  is  paid  as  by  domestic  cor- 
porations, on  or  before  August  15th,  or  “within  thirty  days  after 
July  15th.”  Fiscal  year  commences  July  ist.  L.  1903,  p.  44. 

Books.  No  special  provisions. 

Reports.  The  same  annual  report  is  required  of  foreign  corpora- 
tions as  of  domestic  corporations,  adding  only  the  names  and  post- 
office  addresses  of  its  managing  agents  or  attorneys  in  fact  in  the 
State.  L.  1903,  p.  43. 

Attachments  Against.  There  are  no  special  provisions  as  to 
foreign  corporations. 

15.  Combinations  and  Monopolies. 

Combinations  of  railroads  to  prevent  continuous  carriage,  and 
pooling  freights  is  declared  unlawful.  §5127. 


PENNSYLVANIA. 


1.  Corporation  Laws. 

Constitution.  (18*74.)  No  local  or  special  laws  shall  be  passed 
creating  or  affecting  any  corporation.  Art.  Ill,  § 7.  No  corporation 
shall  engage  in  any  business  not  expressly  authorized  by  charter  (Art. 
XVI,  § 6),  and  it  may  hold  only  such  real  estate  as  is  necessary  and 
proper  for  its  legitimate  business.  Id.  Stock  and  bonds  shall  be 
issued  only  for  labor  done,  or  money  or  property  received.  Fictitious 
increase  of  stock  or  indebtedness  void.  Id.,  § 7.  Neither  stock  nor 
indebtedness  shall  be  increased  without  consent  of  a majority  of  the 
stock  given  at  a meeting  on  sixty  days’  notice.  Id.  Cumulative  vot- 
ing must  be  allowed.  Id.,  §4.  Public  ownership  or  interest  in  private 
corporations  is  prohibited.  Art.  IX,  §§  6,  7. 

Statutes.  The  general  corporation  law  of  Pennsylvania  is  con- 
tained in  the  Laws  of  1874,  p.  73,  and  the  supplemental  and  amenda- 
tory enactments.  Two  classes  of  corporations  are  provided  for,  the 
first  comprising  those  not  for  profit,  the  second  those  organized  for 
profit.  Corporations  for  profit  (second  class)  are  enumerated  and 
authorized  in  twenty-seven  groups,  which  include  all  usual  lines  of 
business.  Section  18  of  this  enumeration  provides  for  “ any  mechani- 
cal, mining,  quarrying  or  manufacturing  business,”  etc.  This  has  been 
amended  and  extended  by  the  addition  of  the  words  “ and  also  in- 
cluding companies  for  the  transaction  of  any  lawful  business  not 
otherwise  specifically  provided  for.”  L.  1901,  Act  313.  Special  acts 
apply  to  banking,  railroad,  canal,  coal,  navigation,  insurance,  natural 
gas,  street  railway,  pipe  line  and  traction  companies  and  co-operative 
associations. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer,  a bonus  of  one- 
third  of  one  per  centum  of  authorized  capital  stock.  L.  1899,  Act  120. 
To  Secretary  of  Commonwealth  for  filing  papers  creating  corporation, 
$30.  L.  1873,  Act  30,  § 1.  Cost  of  publication  approximately,  $10. 
Local  recording  fees,  25  cents  per  folio. 

Franchise  Tax.  An  annual  franchise  tax  of  five  mills  on  each 
dollar  of  actual  value  of  the  whole  capital  is  payable  to  State  Treasu- 
rer. L.  1893,  Act  288.  Taxes  at  various  rates  are  imposed  on  special 
franchises.  Id.  Manufacturing  companies  are  exempt  to  the  extent 
of  capital  actually  employed  in  manufacturing  within  the  State.  Id. 
(For  returns  see  § 13,  “ Reports.”) 


339 


340 


CLASSIFIED  CORPORATION  LAWS. 


Local  Taxation.  Stocks  of  corporations  paying  bonus  are  not 
taxed  as  against  the  individual  stockholders.  If  corporation  makes 
return  of  bonds  and  pays  three  mills  on  each  dollar  of  interest  re- 
ceived, resident  bondholders  are  not  taxed  on  their  bonds.  L.  1885, 
Act  162. 

General.  To  State  Treasurer:  On  increase  of  capital  stock,  a 

bonus  of  one-third  of  one  per  cent,  on  the  authorized  increase.  L. 
1899,  Act  120.  Upon  merger  same  bonus  is  paid  on  any  capital  stock 
of  the  new  company  in  excess  of  the  aggregate  capital  stock  of  the 
constituent  companies. 

To  Secretary  of  the  Commonwealth:  For  filing  and  recording 

affidavit  of  paid  up  capital,  $10;  of  evidence  of  increase  or  decrease  of 
capital  stock,  or  indebtedness,  $30;  for  filing  amendments,  $30;  filing 
agreements  of  merger,  $60;  filing  evidence  of  dissolution,  $10;  change 
of  corporate  name,  $20  (Rules  of  Secretary  of  Commonwealth);  cer- 
tificate with  great  seal,  $1;  with  less  seal,  75  cents;  without  seal,  50 
cents;  certified  copies,  25  cents  a page.  L.  1871,  Act  227  and  L.  1873, 
Act  30. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more,  one  of  whom  at  least 
must  be  a citizen  of  the  Commonwealth.  L.  1901,  Act  207. 

Formation. 

1.  Certificate  of  Incorporation.  Is  prepared  on  blanks  fur- 
nished by  the  Secretary  of  the  Commonwealth  and  must  be  sub- 
scribed, acknowledged  and  verified  by  at  least  two  of  the  incor- 
porators, one  of  whom  must  be  a citizen  of  the  Commonwealth, 
before  the  recorder  of  the  county  in  which  the  corporation  is  to 
be  located,  or  before  any  notary  public  of  Pennsylvania.  L.  1891, 
Act  12.  It  must  set  forth  (L.  1874,  Act  32,  pp.  73,  75) : 

(1)  Name  of  the  corporation.  Similarity  of  name  pro- 
hibited. L.  1903,  Act  185.  May  be  changed  by  two-thirds 
vote  of  stock.  Id. 

(2)  Purpose  for  which  it  is  formed.  No  corporation  shall 
be  authorized  to  transact  more  than  one  kind  of  business. 
L.  1901,  Act  313;  Rules  of  Secretary  of  Commonwealth. 

(3)  Place  where  its  business  is  to  be  transacted  and  its 
corporate  functions  are  to  be  exercised.  Must  be  within  the 
Commonwealth.  L.  1893,  Act  289. 

(4)  Names  and  residences  of  the  subscribers  and  number  of 
shares  subscribed  by  each. 

(5)  Number  of  directors  and  names  and  residences  of  those 
chosen  for  the  first  year.  Number  must  be  at  least  three. 

(6)  Amount  of  capital  stock  and  the  number  and  par  value 
of  shares  into  which  it  is  divided.  No  limitation  as  to  amount 
of  capital.  Par  value  of  shares  must  not  exceed  $100  (L. 


PENNSYLVANIA. 


341 


1874,  Act  32,  p.  79) ; of  mining  companies  may  be  $1.  L. 
1865,  Act  19,  § 8. 

(7)  Of  all  corporations  for  profit  (excepting  building  and 
loan  associations),  it  must  further  be  stated  that  ten  per 
centum  of  the  capital  stock  thereof  has  been  paid  in  cash  to 
the  treasurer  of  the  intended  corporation,  whose  name  and 
residence  must  be  given  therein.  L.  1874,  Act  32,  § 3. 

(8)  If  any  stock  is  issued  for  property,  a statement  of  the 
amount  so  issued  and  to  whom,  and  description  of  property 
received  therefor  must  be  inserted.  L.  1876,  Act  25. 

2.  Notice  of  Intention.  A notice  of  intention  to  apply  for 
charter  must  be  inserted  for  three  weeks  in  two  newspapers  of 
general  circulation  printed  in  the  proper  county.  This  notice 
must  contain  the  names  of  at  least  three  of  the  incorporators, 
must  specify  the  Act  of  the  Assembly  under  which  the  application 
is  to  be  made,  must  state  the  purposes  proposed  and  must  desig- 
nate the  time  when  application  will  be  made  to  the  Governor. 
L.  1874,  Act  32,  § 3.  During  this  period  of  publication,  the  certifi- 
cate should  be  on  file  in  the  office  of  the  Secretary  of  the  Com- 
monwealth, and  the  fee  for  letters  patent  and  bonus  fee  should 
accompany  the  application.  Rules  of  Secretary  of  the  Common- 
wealth. 

3.  Application  to  Governor.  After  completion  of  prescribed 
publication  of  notice,  the  certificate  of  incorporation,  together 
with  due  proof  of  publication  of  notice,  is  presented  to  the  Gov- 
ernor, who,  if  the  application  is  proper  and  in  due  form,  endorses 
his  approval  thereon  and  grants  letters  patent.  L.  1874,  Act  32, 
§3.  Ten  per  cent,  of  the  capital  stock  must  be  paid  in  to  the 
Treasurer  in  cash  before  certificate  will  be  approved  by  Gov- 
ernor. Id. 

4.  Filing  and  Recording.  The  certificate  is  thereupon  re- 
corded in  the  office  of  the  Secretary  of  the  Commonwealth  and 
the  original  certificate  with  all  the  endorsements  is  recorded  in 
the  office  for  the  recording  of  deeds  in  the  county  in  which  the 
chief  operations  are  to  be  carried  on.  L.  1874,  Act  32,  § 3.  An 
abstract  of  the  charter  with  certain  additional  information  is  also 
registered  with  the  Attorney  General.  L.  1879,  Act  122.  (See 
under  § 4,  “ Certificates.”) 

4.  Organization. 

First  Meetings.  If  a majority  of  the  stockholders  are  residents 
of  the  State,  the  organization  meetings  must  be  held  within  the  State. 
If,  however,  a majority  of  the  directors,  incorporators  or  stockhold- 
ers are  citizens  of  another  state,  the  corporation  may  be  organized 
and  directors’  and  stockholders’  meetings  held  at  such  place  as  the 
majority  from  time  to  time  appoint,  whether  within  the  State  or  else- 
where, except  as  to  annual  election,  which  must  always  be  held  within 
the  State.  L.  1866,  Act  1119.  The  directors  for  the  first  year  are 
named  in  the  charter.  L.  1874,  Act  32,  § 3. 

By-Laws.  Are  adopted  by  the  stockholders  and  prescribe  the 
time  and  place  of  meetings,  the  powers  and  duties  of  officials,  and 


342 


CLASSIFIED  CORPORATION  LAWS. 


such  other  matters  as  may  be  pertinent  and  necessary  for  the  business 
to  be  transacted,  and  may  contain  penalties  for  breach  thereof,  not 
exceeding  $20.  L.  1891,  Act  52.  They  may  be  amended  at  any  meet- 
ing of  the  stockholders  duly  called  for  that  purpose.  Bagley  v.  Co., 
201  Pa.  St.  78. 

Certificates.  Before  beginning  business  every  corporation  must 
register  with  the  Auditor  General  the  corporation’s  name,  the  date  of 
incorporation,  the  authority  under  which  formed,  its  place  of  business 
and  post-office  address;  also  names  of  president,  chairman,  secretary 
and  treasurer  and  cashier,  and  amount  of  capital  stock  authorized  and 
amount  paid  in,-  under  penalty  of  $500.  L.  1879,  Act  122;  L.  1889, 
Act  322. 

5.  Corporate  Existence. 

When  Commenced.  Commences  on  recording  charter  in  county 
recorder’s  office  and  may  be  perpetual.  L.  1874,  Act  32,  § 3.  Corpor- 
ate existence  can  not  be  attacked  collaterally.  L.  1885,  Act  116;  Mo- 
nongahela,  etc.  Co.  v.  Co.,  196  Pa.  St.  25. 

Beginning  Business.  Ten  per  cent,  of  capital  stock  must  be  paid 
in  to  the  treasurer  of  the  company  in  cash  before  certificate  will  be 
approved  by  Governor.  L.  1874,  Act  32,  § 3.  Business  may  not  be 
commenced  until  registration  of  certificate  with  the  Auditor  General 
(See  under  § 4,  “ Certificates  ”),  (L.  1879,  Act  122)  nor  until  bonus  is 
paid.  L.  1899,  Act  120.  Business  must  be  commenced  within  two 
years.  L.  1883,  Act  108,  § 5. 

Renewal.  Charter  may  be  renewed  by  execution,  approval  and 
recording  as  was  the  original,  of  a new  certificate.  This  certificate 
must  state  that  it  is  a renewal  of  the  original  charter,  naming  the 
corporation  and  date  of  its  first  incorporation.  The  instrument  must 
be  accompanied  by  a certificate  under  the  corporate  seal,  showing 
consent  of  a majority  in  interest  of  the  stock;  also  the  financial  con- 
dition of  the  corporation,  capital  stock  paid  in,  funded  debt,  floating 
debt,  and  the  estimated  value  of  property  and  cash  assets.  L.  1874, 
Act  32,  § 40. 

Forfeiture  of  Charter.  Occurs  on  failure  to  commence  operations 
in  two  years  after  incorporation,  on  proper  steps  taken  by  the  Attor- 
ney General  on  application  of  any  citizen.  L.  1883,  Act  108,  § 5. 
Quo  warranto  lies  for  non-user  or  misuser.  L.  1836,  Act  174;  L. 
1853,  Act  146;  L.  1872,  Act  39. 

Dissolution.  May  be  had  by  petition  to  court  by  a majority  vote 
of  the  stockholders  (L.  1856,  Act  308),  or  by  quo  warranto.  L.  1836, 
Act  174.  Appointment  of  receiver  is  provided  for.  L.  1893,  Act  22. 
Certified  copy  of  decree  to  be  filed  and  recorded  with  Secretary  of 
Commonwealth.  L.  1856,  Act  308. 

6.  Corporate  Powers. 

General.  Common  law  powers  are  enumerated.  L.  1874,  Act 
32,  § 1. 


PENNSYLVANIA. 


343 


To  Hold  Property.  The  power  to  hold  real  estate  is  limited  to 
corporate  necessities.  Const.,  Art.  XVI,  § 6. 

Its  Own  Stock.  A corporation  has  the  right  to  pur- 
chase its  own  stock  where  the  transaction  is  made  in  good  faith  and 
is  not  prohibited  by  statute.  Dock  v.  Cordage  Co.,  167  Pa.  St.  370. 

Stock  of  Other  Corporations.  This  power  is  fully  con- 
ferred. L.  1901,  Act  298;  L.  1905,  Act  39;  Commonwealth  v.  Co.,  197 
Pa.  St.  569. 

To  Borrow  Money.  The  limitations  on  corporate  indebtedness 
of  L.  1889,  Act  237,  is  removed  by  L.  1905,  Act  190,  which  permits  the 
increase  of  capital  stock  or  indebtedness,  or  both,  with  the  consent  of 
a majority  of  the  stock,  “ to  such  an  amount  in  the  aggregate  of  each, 
without  regard  to  the  amount  of  the  other,  and  regardless  of  any 
limitation  on  the  amount  of  either,  as  it  shall  deem  necessary  to  ac- 
complish and  carry  on  and  enlarge  the  business  and  purposes  of  such 
corporation.”  Franchise  may  be  mortgaged.  Id. 

To  Do  Business  in  Other  States.  Manufacturing  companies  are 
specially  authorized  to  carry  on  their  business,  or  so  much  thereof  as 
is  convenient,  beyond  the  limits  of  the  Commonwealth,  and  to  hold 
there  any  real  or  personal  property  necessary  for  conducting  the 
same.  L.  1874,  Act  32,  § 39. 

Consolidation  or  Merger.  Is  permitted  with  the  usual  procedure. 
A majority  vote  of  the  stock  is  sufficient.  L.  1901,  Act  216.  Before 
consolidation,  certificate  of  Auditor  General  must  show  that  required 
reports  have  been  filed  and  taxes  paid.  L.  1905,  Act  71.  Consolida- 
tion is  prohibited  between  railroads,  telegraph  or  canal  corporations 
owning  parallel  lines.  Const.,  Art.  XVII,  § 4. 

Amendment  of  Charter.  May  be  effected  by  application  to  the 
Governor,  notice  being  first  given  of  intention  to  apply  for  same  by 
means  of  publication  once  a week  for  three  weeks  in  two  newspapers 
in  general  circulation  printed  in  the  county  in  which  principal  office 
or  place  of  business  is  located,  and  a certificate  stating  the  amend- 
ment, to  be  executed  by  the  president  and  secretary,  with  further 
procedure  as  on  original  incorporation.  L.  1883,  Act  108.  Required 
reports  must  have  been  made  and  all  taxes  paid  before  amendment 
will  be  granted.  L.  1905,  Act  70. 

7.  Capital  Stock. 

Amount.  No  limitation.  L.  1899,  Act  120;  L.  1905,  Act  190. 

Initial  Payment.  The  certificate  of  incorporation  must  show 
that  ten  per  cent,  of  the  capital  stock  has  been  paid  in  cash  to  the 
treasurer,  who  must  be  named  in  the  charter.  L.  1874,  Act  32,  § 3. 

Consideration  for  Issue.  No  note  or  obligation  given  by  a stock- 
holder, whether  secured  by  pledge  or  otherwise,  shall  be  considered 
as  payment  of  any  part  of  the  capital  stock.  L.  1887,  Act  159;  L. 
1905,  Act  39.  Corporations  may  take  real  or  personal  property,  min- 
eral or  patent  rights  and  other  property  necessary  for  the  purposes 
of  organization  and  business,  and  issue  stock  to  the  value  thereof  in 


344 


CLASSIFIED  CORPORATION  LAWS. 


payment  thereof,  and  stock  so  issued  shall  be  taken  to  be  full  paid 
and  not  liable  to  further  calls  or  assessments,  but  in  any  certificate 
or  statements  such  stock  must  be  stated  and  certified  according  to  the 
facts.  L.  1876,  Act  25,  § 4.  The  stock  so  issued  may  be  made  de- 
ferred stock  to  await  payments  of  dividends  on  other  full  paid  stock 
to  the  extent  of  five  per  cent.  And  the  facts  in  this  regard  must  be 
stated  in  the  charter  or  in  a certificate  to  be  made  and  recorded.  Id. 
All  fictitious  issue  of  stock  void.  Id.;  Const.,  Art.  XVI,  §7. 

If  owner  of  shares  in  a mining  or  manufacturing  company  is 
thirty  days  in  default,  the  treasurer  may  sell  at  auction,  after  publi- 
cation for  three  weeks,  enough  of  the  shares  to  pay  all  assessments 
due  and  costs  of  sale.  L.  1874,  Act  32,  § 39. 

Increase  or  Decrease.  May  be  had  by  the  consent  of  the  persons 
or  bodies  corporate  holding  the  larger  amount  in  value  of  the  stock, 
at  meeting  called  by  resolution  of  the  board  of  directors  on  notice 
published  once  a week  for  sixty  days  in  a newspaper  published  in  the 
county,  city  or  borough  of  the  chief  office  or  place  of  business  in  the 
Commonwealth,  where  the  meeting  must  be  held.  Three  judges  of 
election  must  be  appointed  by  the  directors  from  the  stockholders, 
who  must  be  severally  sworn  in  writing.  Voting  must  be  by  ballot, 
each  ballot  showing  the  number  of  shares  represented  thereby  and 
being  signed  by  the  owner,  or  by  the  person  holding  his  proxy  and 
no  shares  may  be  voted  which  have  been  transferred  within  sixty 
days  before  the  meeting,  nor  shall  any  proxy  be  valid  unless  it  bears 
date  and  was  executed  within  three  months  next  preceding  the  meet- 
ing. If  consented  to,  a certificate  of  increase  must  be  filed  with  the 
Secretary  of  the  Commonwealth  within  thirty  days  after  the  meeting, 
consisting  of  a copy  of  the  returns  of  the  judges  of  the  election,  with 
a copy  of  the  resolution  and  notice  calling  the  meeting.  L.  1874,  Act 
25.  Within  thirty  days  after  the  accomplished  increase,  the  president 
or  treasurer  must  make  return  under  oath  to  the  Secretary  of  the 
Commonwealth,  of  the  amount  and  terms  of  such  increase,  on  penalty 
of  $5,000.  Id.;  L.  1905,  Act  190.  The  Secretary  of  the  Commonwealth 
records  the  return  and  furnishes  certified  copy  thereof  to  the  Auditor 
General.  L.  1874,  Act  25,  § 5.  Same  proceedings  for  reduction.  L. 
1905,  Act  183;  also  see  Const.,  Art.  XVI,  §7.  Old  stockholders  have 
prior  right  to  new  stock.  Electric  Co.  v.  Co.,  200  Pa.  St.  516. 

Classes  of  Stock.  May  be  created  by  consent  of  majority  in  in- 
terest of  the  stockholders,  at  meeting  called  for  that  purpose  on  thirty 
days’  notice  published  in  newspaper  in  the  proper  county,  dividends 
not  exceeding  12  per  cent.,  as  prescribed  by  the  directors,  to  be  paid 
out  of  net  earnings  only.  L.  1872,  Act  28;  L.  1874,  Act  32,  § 16. 

Par  Value  of  Shares.  Shall  not  be  more  than  $100  each.  L. 
1874,  Act  32,  § 11.  May  be  changed  by  same  proceedings  as  prescribed 
for  increase  of  stock.  L.  1901,  Act  302. 

Stock  Certificates.  The  stockholders  shall  receive  certificates  of 
stock  signed  by  the  president,  countersigned  by  the  treasurer  and 
sealed  with  the  corporate  seal.  L.  1874,  Act  32,  § 7;  L.  1895,  Act  172. 

Transfer  of  Stock.  Shares  are  transferable  on  the  books  of  the 
company,  as  the  by-laws  may  prescribe.  And  no  certificate  shall  be 


PENNSYLVANIA. 


345 


transferred  so  long  as  the  holder  is  indebted  to  the  company  unless 
the  board  of  directors  assent  thereto,  nor  until  all  calls  thereon  have 
been  paid,  or  they  have  been  declared  forfeited  for  such  non-payment. 
L.  1887,  Act  159. 


8.  Stockholders. 

Rights  and  Powers.  They  adopt  by-laws  (L.  1891,  Act  52),  and 
control  amendments,  etc.,  by  majority  vote.  Change  of  name  requires 
a two-thirds  vote.  L.  1903,  Act  251. 

Liability.  Stockholders  are  liable  for  any  amount  remaining  un- 
paid on  their  stock.  L.  1874,  Act  32,  §11.  Stockholders  are  also 
liable  to  the  amount  of  stock  held  by  each,  for  wages  of  employees. 
L.  1876,  Act  25,  § 3.  Actions  to  enforce  are  brought  jointly  against 
the  corporation  and  one  or  more  of  the  stockholders,  and  execution 
is  first  levied  on  property  of  the  corporation  and  if  insufficient,  is 
collected  out  of  the  stockholders’  property.  Stockholder  paying  same 
may  enforce  contribution.  Employee’s  suit  must  be  brought  within 
six  months  after  wages  become  due.  L.  1874,  Act  32,  § 15. 

Meetings.  Directors  are  to  be  elected  annually  by  the  stock- 
holders (L.  1891,  Act  52)  at  meeting  held  within  the  State.  L.  1866, 
Act  1 1 19 ; L.  1893,  Act  289.  If  a majority  of  the  stockholders,  incor- 
porators or  directors  reside  without  the  State,  meetings  other  than 
elections  may  be  held  without  the  State.  L.  18 66,  Act  1119.  Meetings 
for  increase  or  decrease  of  stock  must  be  held  in  Pennsylvania.  L. 
1874,  Act  25,  §3.  The  judge  or  officer  holding  election  must  first 
take  oath  that  he  will  receive  no  votes  except  such  as  he  verily  be- 
lieves to  be  legal.  L.  1874,  Act  32,  § 8.  Failure  to  properly  take  oath 
makes  election  irregular  and  new  election  may  be  ordered  by  court 
of  common,  pleas  of  proper  county  on  application  of  not  less  than 
five  stockholders.  Id.  Time  and  place  of  holding  annual  or  other 
meetings  .may  be  changed  by  a two-thirds  vote  of  the  directors  ap- 
proved by  a two-thirds  vote  of  the  stockholders,  at  a meeting  duly 
called;  certificate  thereof  to  be  filed  by  the  president  under  the  cor- 
porate seal  with  the  Secretary  of  the  Commonwealth  and  Auditor 
General.  L.  1893,  Act  289. 

Notice.  Sixty  days’  notice  is  prescribed  by  the  Constitution  for 
increase  of  stock  or  indebtedness.  Art.  XVI,  § 7.  Notice  for  other 
meetings  may  be  prescribed  by  by-laws. 

Quorum.  Unless  otherwise  determined  by  the  by-laws,  a ma- 
jority in  interest  of  the  stockholders  constitutes  a quorum.  L.  1874, 
Act  32,  §6. 

Voting.  Cumulative  voting  must  be  allowed.  Const.,  Art.  XVI, 
§4;  L.  1876,  Act  36.  Voting  at  elections  must  be  by  ballot  and  voting 
by  proxy  is  permitted.  No  stockholder  may  vote  who  is  in  default 
for  assessments  for  thirty  days  prior  to  the  election.  L.  1874,  Act 
32,  § 11. 

Proxies.  May  or  may  not  be  acknowledged,  but  must  be  attested 
by  one  witness,  and  are  not  valid  for  more  than  two  months  after 
date.  L.  1903,  Act  17. 


346 


CLASSIFIED  CORPORATION  LAWS. 


g.  Directors. 

Number.  Not  less  than  three.  L.  1891,  Act  52.  May  be  changed 
at  any  annual  or  other  meeting  of  the  stockholders  called  for  that 
purpose,  or  by  the  directors  themselves  if  authorized  thereto  by  the 
by-laws.  L.  1901,  Act  51.  The  directors  may  be  divided  into  from 
one  to  four  classes,  one  class  to  be  elected  each  year.  L.  1887,  Acts 
93,  274. 

Qualifications.  Need  not  be  stockholders.  Opinion  of  Atty. 
Gen.,  7 Pa.  C.  C.  178.  One  at  least  must  be  a resident*  of  the  State. 
L.  1887,  Act  166. 

Powers.  They  may  elect  officers  or  directors  to  filll  vacancies 
until  next  election.  L.  1874,  Act  32,  § 9.  They  are  trustees  on  disso- 
lution unless  court  appoints  a receiver.  L.  1872,  Act  39;  L.  1893,  Act 
22.  They  may  change  their  own  number  if  so  authorized  by  the 
by-laws.  L.  1901,  Act  51. 

Liability.  Directors  of  manufacturing  companies  are  liable  for 
corporate  debts  to  the  extent  of  any  illegal  dividends  declared  and 
paid,  and  for  any  debts  permitted  to  be  contracted  in  excess  of  the 
paid  capital  stock.  Directors  absent  or  objecting  to  any  such  action 
may  exempt  themselves  from  liability  by  filing  objection  in  writing 
with  clerk  of  the  company.  L.  1874,  Act  32,  § 39.  There  are  penal 
provisions  for  omission  to  make  entries,  for  false  entries  or  for  being 
interested  in  furnishing  materials  or  supplies,  etc.  Strunk  v.  Owen, 
199  Pa.  St.  73;  Erny  v.  Schmidt  Co.,  197  Pa.  475. 

Meetings.  Directors’  meeting  may  be  held  without  the  State  if 
a majority  of  the  stockholders  and  directors  are  citizens  of  any  other 
state.  L.  1866,  Act  1119.  In  the  absence  of  a by-law  or  custom  to  the 
contrary,  at  least  one  full  day’s  notice  should  be  given.  Library  Hall 
v.  Ass’n,  173  Pa.  St.  30.  A majority  of  the  whole  number  of  directors 
constitutes  a quorum.  L.  1891,  Act  52. 

Executive  Committee.  May  be  provided  for  by  by-laws. 

10.  Officers. 

General.  A president,  secretary  or  clerk  and  a treasurer  are  re- 
quired and  such  other  officers,  agents  and  factors  as  the  corporation 
authorizes.  President  must  be  a director.  L.  1891,  Act  52.  The 
secretary  or  clerk  must  be  sworn,  and  must  record  the  votes  of  the 
corporation  and  the  minutes  of  its  transactions  in  a book  kept  for 
that  purpose.  Id.  The  treasurer  must  file  bond  as  required  by  the 
by-laws,  and  he  shall  keep  the  moneys  of  the  corporation  in  a sepa- 
rate book  account  to  his  credit  as  treasurer.  For  failure  to  do  so  he 
is  liable  to  penalty  of  $50  for  each  day  he  defaults,  recoverable  at  the 
suit  of  the  informer.  L.  1874,  Act  32,  § 9. 

11.  Principal  Office. 

Must  be  maintained  in  the  Commonwealth,  and  may  be  changed 
by  two-thirds  vote  of  directors,  approved  by  two-thirds  vote  of  the 


PENNSYLVANIA. 


347 


stockholders,  at  meeting  duly  called;  a certificate  specifying  the 
change  to  be  filed  by  the  president  in  the  offices  of  the  Secretary  of 
the  Commonwealth  and  of  the  Auditor  General.  L.  1893,  Act  289. 


12.  Corporate  Books. 

What  Required.  The  secretary  or  clerk  is  charged  with  keeping 
a record  of  votes  by  the  corporation  and  minutes  of  its  transactions. 
L.  1891,  Act  52. 

Where  Kept.  At  the  principal  office  in  the  State.  L.  1891,  Act 
52;  L.  1893,  Act  289. 

Examination  of.  The  certificate  of  stock  and  transfer  book  or 
either  shall  be  prima  facie  evidence  of  the  right  to  vote.  L.  1893,  Act 
90;  Neubert  v.  Armstrong  W.  Co.,  211  Pa.  St.  582. 

13.  Reports. 

Every  stock  corporation,  except  banks,  savings  institutions  and 
foreign  insurance  companies,  must  make  an  annual  report  to  the 
Auditor  General  in  November  of  each  year,  stating:  (1)  Total  au- 

thorized capital  stock.  (2)  Total  authorized  number  of  shares.  (3) 
Number  of  shares  issued.  (4)  Par  value  of  each  share.  (5)  Amount 
paid  on  each  share.  (6)  Amount  of  capital  paid  in.  (7)  Amount  of 
capital  on  which  dividend  has  been  declared.  (8)  Date  of  each  divi- 
dend declared  during  year  ending  first  Monday  of  November.  (9) 
Rate  per  cent,  of  each  dividend.  (10)  Amount  of  each  dividend  dur- 
ing year  ending  first  Monday  of  said  month.  (11)  Gross  earnings 
during  year.  (12)  Net  earnings  during  said  year.  (13)  Amount  of 
surplus.  (14)  Amount  of  profit  added  to  sinking  fund  during  said 
year.  (15)  Highest  price  of  sales  of  stock  between  November  1st 
and  15th.  (16)  Highest  price  of  sales  of  stock  during  the  year  afore- 

said. (17)  Average  price  of  sales  of  stock  during  the  year. 

Two  officers  of  the  company  are  to  appraise  the  stock  between 
November  1st  and  15th,  and  one  of  these  officers  is  to  verify  the  re- 
port. But  the  Auditor  General  and  State  Treasurer  may  make  further 
examination  and  appraise  the  stock  at  actual  value  found  by  them. 
L.  1891,  Act  200,  § 4. 

Penalty  for  failure  to  file  report  for  three  tax  years  is  fine  of  $500. 
L.  1905,  Act  121.  If  report  is  not  made  after  notification,  the  au- 
thorities are  directed  to  make  a return  as  near  as  possible  and  add 
fifty  per  cent,  to  the  amount  as  a basis  for  taxation.  L.  1905,  Act 
I34- 

Before  beginning  business  in  the  State,  all  corporations  must  file 
with  the  Auditor  General  a statement  giving:  (1)  The  name  of  the 
company;  (2)  date  of  incorporation;  (3)  authority  under  which 
formed;  (4)  place  of  business;  (5)  post-office  address;  (6)  names  of 
the  president,  chairman,  secretary  and  treasurer  or  cashier;  (7) 
amount  of  capital  authorized;  (8)  and  the  amount  of  capital  paid 
into  the  treasury;  and  shall  thereafter  annually  notify  the  Auditor 
General  of  any  change  in  their  officers.  A penalty  of  $500  is  imposed 
for  failure  to  file  this  statement.  L.  1879,  Act  122;  L.  1889,  Act  322. 


348 


CLASSIFIED  CORPORATION  LAWS. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  foreign  corporation  shall 
do  business  in  the  State  without  having  one  or  more  known  places 
of  business  and  an  authorized  agent  or  agents  therein  on  whom  pro- 
cess may  be  served.  Const.,  Art.  XVI,  § 5.  Before  commencing 
business  a foreign  corporation  must  file  a report  with  the  Secretary 
of  the  Commonwealth,  under  seal  of  the  corporation  and  signed  by 
the  president  or  secretary,  showing:  (1)  The  title  and  object  of  the 

corporation;  (2)  location  of  its  office  or  offices;  (3)  and  the  name  or 
names  of  its  agent  or  agents  therein;  and  a certificate  of  the  Secre- 
tary of  the  Commonwealth  under  its  seal,  of  the  filing  of  such  state- 
ment, shall  be  kept  for  public  inspection  by  each  of  said  agents. 
L.  1874,  Act  33. 

Every  such  corporation  must  further,  before  commencing  busi- 
ness in  the  State,  make  a report  under  oath  to  the  Auditor  General, 
stating:  (il  State  or  country  in  which  incorporated  or  created.  (2) 
Date  of  incorporation  or  creation.  (3)  Location  of  chief  office  in  the 
State.  (4)  Name  and  address  of  president  and  treasurer.  (5)  Amount 
of  bonded  indebtedness.  (6)  Amount  of  authorized  capital  stock. 

(7)  Amount  of  capital  paid  in.  (8)  Amount  of  capital  employed 
wholly  in  the  State  of  Pennsylvania.  A similar  report  must  be  filed 
annually  thereafter  before  November  30th  of  each  year.  L.  1901,  Act 
121.  Filing  fee,  $10.75.  Rules  of  Secretary  of  Commonwealth. 

Fees  are  one-third  of  one  per  cent,  on  amount  of  capital  actually 
employed  in  the  State,  and  a like  fee  on  any  subsequent  increase.  L. 
1901,  Act  121. 

Foreign  corporations  generally  have  no  power  to  hold  real  estate 
in  Pennsylvania,  but  special  provisions  are  made  for  certain  classes 
permitting  such  holding.  L.  1893,  Acts  296,  338. 

A business  corporation  organized  in  another  state  but  having 
three  or  more  stockholders  citizens  of  the  State,  may  become  a do- 
mestic corporation  by  filing  and  recording  a certificate  containing  the 
same  facts  as  required  on  regular  incorporation,  but  in  addition  also: 

(8)  The  legislation  under  which  it  was  originally  created,  and  (9)  its 
financial  condition  at  date  of  certificate,  showing  capital  stock  paid  in, 
funded  debt,  floating  debt,  estimated  value  of  property  and  cash 
assets,  if  any.  This  certificate  is  executed  by  three  of  the  directors 
(before  a Pennsylvania  officer),  approved,  filed  and  recorded  in  same 
manner  as  on  regular  incorporation,  but  it  must  be  accompanied  by 
a certificate  under  the  corporate  seal  showing  consent  of  a majority 
in  interest  of  the  corporation  to  such  acts  and  to  renunciation  of  the 
original  charter  and  of  all  privileges  not  enjoyed  by  Pennsylvania 
corporations  of  its  class.  Publication  of  notice  by  application  is  not 
required,  and  this  law  may  therefore  be  availed  of,  by  bona  fide  com- 
pliance, where  time  is  to  be  gained  and  another  convenient  state  offers 
better  facilities  for  speedy  incorporation.  L.  1881,  Act  98.  Bonus 
must  be  paid,  but  no  statement  of  payment  of  ten  per  cent,  of  capital 
stock  is  required.  Sherman  Mfg.  Co.,  12  Pa.  C.  C.  R.  165;  5 Pa.  C.  C. 
R.  231. 

Penalties  for  Non-Compliance.  Imprisonment  not  exceeding 
thirty  days  and  fine  not  exceeding  $1,000  is  prescribed  for  any  person, 
agent  or  employee  doing  business  in  the  State  for  an  unauthorized 
foreign  corporation.  L.  1874,  Act  33. 


PENNSYLVANIA. 


349 


Taxation.  Same  as  of  domestic  corporations,  except  foreign  in- 
surance companies.  L.  1901,  Act  60. 

Books.  No  special  provisions. 

Reports.  They  are  to  file  annually  not  later  than  November  30th, 
the  same  report  with  the  Auditor  General  as  required  before  com- 
mencing business.  L.  1901,  Act  121.  (See  § 13,  “Reports.”) 

Attachments  Against.  Attachment  lies  against.  Lett  v.  Thurber 
W.  Co.,  15  Penn.  C.  C.  R.  666. 

15.  Combinations  and  Monopolies. 

No  direct  provisions.  The  tendency  of  the  law,  as  shown  by  its 
provisions  in  regard  to  consolidation  and  the  control  of  stocks,  bonds 
and  franchises  of  other  corporations,  is  to  open  the  door  for  combi- 
nations. The  courts  have,  however,  held  that  combinations  in  re- 
straint of  trade  and  to  control  prices  are  illegal.  Nester  v.  Conti- 
nental Brewing  Co.,  161  Pa:  St.  473;  Morris  Run  Coal  Co.  v.  Barclay 
Coal  Co.,  68  Pa.  St.  173.  Combinations  of  telegraph,  railroad  or  canal 
companies  running  parallel  or  competing  lines,  and  discrimination  in 
rates  are  prohibited.  Id.;  Const.,  Art.  XVI,  § 12;  Art.  XVII,  §§4,  7,  8. 


PHILIPPINE  ISLANDS. 


By  U.  S.  Stat.  at  Large  (1902),  Vol.  32,  Ch.  1369,  § 1,  the  general 
provision  that  the  Constitution  and  Laws  of  the  United  States  extend 
to  its  Territories  (Compiled  Laws,  1878),  is  expressly  set  aside  as 
regards  the  Philippine  Islands. 

No  complete  system  of  corporation  laws  has  yet  been  provided 
for  the  Islands.  Certain  general  powers  as  to  the  grant  of  franchises, 
privileges  and  concessions  have  been  vested  in  the  provisional  govern- 
ment of  the  Islands  and  32  U.  S.  Stat.  at  Large,  Ch.  1369,  § 75,  also 
impose  some  few  restrictions  on  corporate  holdings  of  real  estate. 

Beyond  this  the  Philippine  Commission  has  had  a code  of  corpor- 
ation law  in  course  of  preparation  for  over  a year  past.  The  pub- 
lished draft  of  this  proposed  code  shows  a very  complete  system  of 
corporation  law,  similar  in  most  of  its  details  to  the  laws  of  the  ad- 
vanced corporation  states  of  this  country.  This  proposed  law  has, 
however,  roused  active  opposition  on  account  of  the  stringency  of 
some  of  its  provisions,  particularly  those  relating  to  foreign  corpora- 
tions doing  business  in  the  Philippines,  and  this  opposition  has  in- 
volved much  delay,  and  renders  the  date  of  the  adoption  of  a code 
and  its  final  form  a matter  of  much  uncertainty. 

In  the  absence  of  other  laws  the  Commercial  Code  of  1885  still 
obtains  in  the  Philippine  Islands  and  governs  corporate  formation 
and  operations  as  far  as  it  applies.  Under  the  Commercial  Code  a 
corporation  may  be  formed  by  the  preparation  of  a certificate  con- 
taining: The  names  of  the  incorporators;  the  name  of  the  company, 
which  must  indicate  the  object  or  objects  of  the  enterprise  and  not  be 
identical  with  that  of  any  existing  corporation;  the  managers  of  the 
corporate  business  and  the  manner  of  filling  vacancies;  the  capital 
stock  and  the  number  of  shares;  provision  for  payment  of  instalments 
of  capital;  duration  of  company;  nature  of  its  business,  and  general 
provisions  for  the  regulation  of  the  corporate  affairs.  This  certifi- 
cate must  be  registered  in  the  Commercial  Register  at  Manila. 

A foreign  corporation  doing  business  in  the  Philippines  must 
enter  in  the  Commercial  Register  at  Manila  a copy  of  its  charter, 
evidence  of  the  due  incorporation  of  the  company,  and  such  other 
documents,  statements  and  certifications  as  are  required  under  the 
Spanish  laws. 


350 


. xiILIPPINE  ISLANDS. 

Enactments  of  1906. 

1.  Corporation  Laws. 

“ The  Corporation  Law  ” of  the  Philippine  Islands  is  contained 
in  an  Act  of  the  Philippine  Commission,  numbered  1459.  This  Act  is 
in  two  chapters,  Chapter  I containing  general  provisions  as  to  cor- 
porations and  Chapter  II  containing  special  provisions  relating  to 
railroads,  savings  and  mortgage  banks,  banking,  trust,  insurance, 
building  and  loan  and  religious  corporations,  and  colleges  and  institu- 
tions of  learning. 

Under  the  general  provisions  of  Chapter  I,  corporations  may  be 
formed  for  any  lawful  purpose  (§  6),  except  to  deal  in  real  estate. 
§ 13,  subdiv.  5. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Chief  of  the  Division  of  Archives  for 
filing  articles  of  corporation,  25  pesos.*  § 8. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  As  for  individuals. 

General.  To  Chief  of  the  Division  of  Archives:  For  filing  dupli- 

cate certificate  of  change  of  capital  stock,  or  creation  or  increase 
of  bonded  indebtedness,  20  pesos.  § 17.  For  filing  by-laws  or  amend- 
ments or  additions  thereto,  2 pesos.  §§  20,  23. 

3.  Incorporation. 

Incorporators.  Must  be  not  less  than  five  nor  more  than  fifteen. 
A majority  must  be  residents  of  the  Philippine  Islands.  § 6. 

Articles  of  Incorporation.  Must  be  executed  and  acknowledged 
before  a notary  public  (§  6),  and  must  set  forth  (Id.): 

(1)  Name  of  corporation, 

(2)  The  purpose  for  which  the  corporation  is  formed. 

(3)  Location  of  principal  office  which  must  be  within  the 
Philippine  Islands. 

(4)  Duration,  not  exceeding  fifty  years  except  as  hereinafter 
provided. 

(5)  Names  and  residences  of  incorporators. 

(6)  Number  of  directors,  not  less  than  five  nor  more  than 
eleven,  who  shall  act  until  their  successors  are  elected  and  qualified 
as  provided  in  by-laws. 

(7)  Amount  of  capital  stock  in  Philippine  currency,  and 
number  of  shares. 

* A peso  is  equal  to  fifty  cents  American  currency. 


PHILIPPINE  ISLANDS. 


(8)  Amount  actually  subscribed,  names  and  residences  of 
subscribers  and  the  amount  subscribed  by  each.  Amount  sub- 
scribed must  be  not  less  than  twenty  per  cent,  of  total  capital 
stock,  and  not  less  than  twenty-five  per  cent,  of  the  subscriptions 
must  be  paid  in.  § 9. 

(9)  Sum  paid  in  by  each  subscriber. 

(10)  Name  of  treasurer  elected  by  the  subscribers  to  act  as 
such  until  his  successor  is  elected  and  qualified.  The  charter  must 
also  state  that  the  treasurer  named  has  been  authorized  to  receive 
the  subscriptions  of  the  subscribers  and  receipt  therefor  in  the 
corporate  name.  § 7. 

Additional  details  are  required  of  railroad,  tramway,  wagon  road, 
telegraph  and  telephone  companies.  § 6. 

Form  for  articles  of  incorporation  is  prescribed  in  the  Act.  § 7. 
This  form  must  be  followed  in  its  substantial  details. 

Filing  and  Recording.  The  articles  of  incorporation,  accompanied 
by  a sworn  statement  of  the  treasurer  elected  by  the  subscribers,  that 
at  least  twenty  per  cent,  of  the  entire  capital  has  been  subscribed  and 
at  least  twenty-five  per  cent,  of  these  subscriptions  has  been  paid  to 
him  for  the  benefit  of  the  corporation  (§  9),  is  filed  in  the  Division  of 
Archives.  § 6.  The  Chief  of  the  Division  of  Archives  then  issues 
to  the  incorporators  under  the  seal  of  his  office  a certificate  that  the 
articles  of  incorporation  have  been  duly  filed.  § 11. 

4.  Organization. 

First  Meetings.  Of  stockholders  must  be  held  in  the  place  where 
the  principal  office  is -located,  and,  if  practicable,  in  the  principal  office 
(§  24),  within  one  month  after  the  filing  of  articles,  for  the  adoption  of 
by-laws  (§  20)  and  election  of  directors  or  the  determination  of  a sub- 
sequent meeting  therefor.  § 29, 

Immediately  after  their  own  election  the  directors  must  organize 
by  the  election  of  a president  from  their  number,  and  a secretary  or 
clerk  who  shall  be  a resident  of  the  Islands,  and  a citizen  of  the 
United  States  or  of  the  Philippines.  § 33. 

By-Laws.  By-laws  may  fix  or  change  the  number  of  officers  and 
directors  within  the  limits  prescribed  by  law.  § 13,  subdiv.  7.  By-laws 
must  be  adopted  by  a majority  vote  of  stockholders,  be  signed  by  the 
stockholders  voting  therefor  and  be  kept  in  the  principal  office  open  to 
inspection  of  stockholders.  A copy,  certified  by  a majority  of  the 
directors  and  countersigned  by  the  secretary,  must  be  filed  with  the 
Chief  of  the  Division  of  Archives  and  is  by  him  atached  to  the  original 
articles  of  incorporation.  § 20.  Power  to  make,  repeal  or  amend  by- 
laws may  be  delegated  to  the  directors  by  two-thirds’  vote  of  the  sub- 
scribed capital  stock.  § 22.  The  by-laws  may  provide  for  the  time, 
manner  and  place  of  calling  and  conducting  meetings  of  directors  and 
the  time  and  manner  of  conducting  stockholders’  meetings,  and  the 
quorum  thereat  for  business  other  than  the  election  of  directors;  the 
mode  of  securing  and  voting  proxies;  the  qualifications,  duties  and 
compensation  of  directors,  officers  and  employees;  the  time  of  annual 
election  and  notice  thereof;  the  manner  of  election  and  term  of  office 
of  all  officers  other  than  directors  and  those  elected  by  the  directors; 
penalties  for  violations  of  by-laws,  not  exceeding  200  pesos;  the 
manner  of  issuing  stock  certificates,  and  such  other  matters  not  pro- 


PHILIPPINE  ISLANDS. 


vided  for  by  the  Act  as  may  be  necessary  for  the  proper  or  convenient 
transaction  of  the  corporate  business.  § 21. 

Amendments  or  new  by-laws  must  be  attached  to  the  original  by- 
laws in  the  office  of  the  corporation  and  a certified  copy  be  filed  with 
the  Chief  of  the  Division  of  Archives,  etc.  Filing  fee,  2 pesos.  § 23. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  of  filing  by  Chief 
of  Division  of  Archives,  etc.  Continues  fifty  years.  § 11.  Copy  of 
the  articles  of  incorporation,  duly  certified  by  Chief  of  Division  of 
Archives,  etc.,  is  prima  facie  evidence  of  the  facts  therein  stated.  § 10. 
Continues  for  three  years  after  expiration  or  dissolution  for  purpose 
of  closing  corporate  affairs.  § 77.  Cannot  be  inquired  into  col- 
laterally. § 19. 

Beginning  Business.  May  be  commenced  as  soon  as  certificate  of 
filing  is  issued.  Must  be  begun  within  two  years.  § 19. 

Renewal.  May  not  be  effected  by  amendment.  § 18. 

Forfeiture  of  Charter.  Occurs  for  non-user  after  failure  to  organ- 
ize and  commence  business  for  two  years  from  date  of  organization. 
§ 19.  May  occur  if  slave  labor  is  employed.  § 15. 

Dissolution.  A corporation  may  be  dissolved  at  any  time  by  the 
Court  of  First  Instance  for  the  province  wherein  the  principal  office 
is  situated  upon  the  voluntary  application  of  the  holders  of  two-thirds 
of  the  outstanding  stock.  § 62.  The  application  must  be  in  writing 
and  shall  set  forth  the  liabilities  of  the  corporation  and  state  that  at  a 
meeting  the  dissolution  had  been  voted  by  the  holders  of  two-thirds  of 
the  stock.  § 63.  The  application  must  be  signed  by  a majority  of  the 
directors  and  must  be  verified  by  the  president,  or  secretary  or  clerk 
or  some  director.  § 64.  Notice  must  be  given  by  publication  or  post- 
ing from  thirty  to  sixty  days  and  a date  must  be  set  prior  to  which  any 
person  may  file  objections.  § 65.  The  court  may  try  issues  as  objec- 
tions are  made,  and  if  the  statements  made  are'  shown  to  be  true  the 
court  may  appoint  receivers  arid  declare  the  corporation  dissolved. 
§ 66. 

Every  corporation  whose  existence  is  terminated  shall  continue  as 
a body  corporate  for  three  years  to  wind  up  its  affairs. 

‘ ' H 

6.  Corporate  Powers. 

General.  Usual  powers  are  conferred.  § 13.  The  corporate 
powers  are  expressly  limited  to  those  conferred  by  the  Act  and  such 
as  are  necessary  to  the  exercise  of  these  powers.  § 14.  No  corpora- 
tion shall  be  authorized  to  deal  in  real  estate.  § 13,  subdiv.  5.  Cor- 
porations may  not  employ  slave  labor  under  penalty  of  20,000  pesos 
and  forfeiture  of  rights  and  charter.  § 15. 

To  Hold  Property.  Extends  to  such  property  as  is  permitted  by 
the  corporate  purposes  or  is  reasonably  necessary  for  the  transaction 
of  its  lawful  business.  § 13,  subdiv.  5.  Agricultural  corporations  shall 
not  hold  more  than  1024  hectares  of  land.  Id.  Real  estate  taken  in 
payment  of  debts,  if  not  necessary  to  the  corporate  purposes  or  busi- 
ness, must  be  disposed  of  within  five  years  from  acquisition.  Id. 


PHILIPPINE  ISLANDS. 


Its  Own  Stock.  May  bid  in  its  stock  sold  for  unpaid 
assessments,  if  amount  due  cannot  be  secured.  § 44.  Such  stock  is 
disposed  of  by  a majority  vote  of  the  stockholders.  § 45. 

Stock  of  Other  Corporations.  No  provision  except  that 
a corporation  may  hold  any  property  permitted  by  its  purposes  or 
necessary  to  the  transaction  of  its  lawful  business..  § 13,  subdiv.  5. 

To  Borrow  Money.  The  incurring,  creating  or  increasing  of 
bonded  indebtedness  must  be  authorized  by  a majority  vote  of  the  sub- 
scribed capital  stock,  at  a stockholders’  meeting  regularly  called  for 
the  purpose.  § 17.  Procedure  same  as  for  increase  or  reduction  of 
capital  stock.  (See  “ Capital  Stock.”) 

To  Do  Business  in  Other  States.  No  provisions. 

Consolidation  or  Merger.  No  direct  provisions  but  no  stock- 
holder of  a corporation  engaged  in  agriculture  or  mining,  and  no  cor- 
poration save  irrigation  corporations  shall  be  anywise  interested  in  any 
other  agricultural  or  mining  corporation.  § 13,  subdiv.  5. 

Amendment  of  Charter.  May  be  effected  by  a majority  vote  of 
the  directors  and  the  vote  or  written  assent  of  two-thirds  in  interest  of 
the  subscribed  stock.  Copy  of  the  amended  articles,  duly  certified  by 
the  president  and  secretary  of  the  corporation,  and  a majority  of  the 
directors,  must  be  filed  in  the  office  of  the  Chief  of  the  Division  of 
Archives,  etc.,  and  be  attached  to  the  original  articles.  § 18.  Existence 
may  not  be  prolonged  by  amendment.  Id. 

7.  Capital  Stock. 

Amount.  No  limitations. 

Initial  Payment.  At  least  twenty  per  cent,  of  the  entire  capital 
stock  must  be  subscribed  and  twenty-five  per  cent,  of  this  subscription 
must  be  paid  in  before  charter  is  filed.  § 9. 

Consideration  for  Issue.  Must  be  cash  or  property  actually  re- 
ceived at  a fair  valuation  equal  to  the  par  value  of  the  stock  or  bonds 
issued  therefor.  § 16.  Subscribers  must  pay  six  per  cent,  per  annum 
on  unpaid  subscriptions  unless  otherwise  provided  in  the  by-laws  § 36. 
No  full  paid  certificate  shall  be  issued  until  the  full  par  value  has  been 
received  by  the  corporation.  § 36. 

Assessments  for  unpaid  subscriptions  may  be  made  at  discretion 
of  directors  and  stock  may  be  sold  for  default.  §§  37-50.  No  stock 
declared  delinquent  by  the  directors  shall  be  voted  at  any  election  for 
directors.  §§  31,  50.  Shares  of  stock  may  be  sold  for  the  payment  of 
debts  due  the  corporation  from  the  owners.  § 13,  subdiv.  8. 

Increase  or  Decrease.  May  be  effected  by  two-thirds  vote  of  the 
subscribed  capital  stock  cast  at  a stockholders’  meeting  called  for  the 
purpose.  Procedure  prescribed.  § 1 7.  No  change  of  capital  stock 
may  be  made  affecting  the  rights  or  actions  which  have  accrued  to 
others.  § 18. 

Classes  of  Stock.  Par  Value  of  Shares.  No  provisions. 

Stock  Certificates.  Must  be  signed  by  president  or  vice-president, 
countersigned  by  secretary  or  clerk,  and  sealed.  § 35. 

Transfer  of  Stock.  May  be  transferred  by  endorsed  certificate, 
but  no  such  transfer  is  good  except  as  between  the  parties  until  entered 


PHILIPPINE  ISLANDS.  _ 


on  the  corporate  records  so  as  to  show  the  names  of  the  parties,  the 
date,  the  number  of  the  certificate  and  the  number  of  shares  trans- 
ferred. No  unpaid  shares  are  transferable  on  the  books  of  the  cor- 
poration. § 35. 

8.  Stockholders. 

Rights  and  Powers.  Stockholders  of  agricultural  or  mining  cor- 
porations may  not  be  in  anywise  interested  in  another  similar  corpora- 
tion. § 13,  subdiv.  5.  They  may  remove  directors  by  prescribed  pro- 
cedure and  fill  the  vacancy  so  created.  § 34.  They  adopt  by-laws. 
§ 20. 

Liability.  Stockholders  are  liable  for  unpaid  subscriptions  and 
interest  thereon  and  costs  of  collection.  § 49. 

Meetings.  Must  be  held  at  the  place  where  the  principal  office  is 
located  and  in  the  principal  office,  if  practicable.  § 24. 

Notice  and  Quorum.  To  be  fixed  by  by-laws  (§  21)  except  for 
election  of  directors  at  which  a majority  of  the  subscribed  capital  stock 
entitled  to  vote  must  be  present.  § 31.  Any  meeting  is  valid  at  which 
all  are  present.  § 25. 

Voting.  No  stock  delinquent  for  unpaid  subscriptions  shall  vote 
or  be  represented  at  any  corporate  meeting.  §§  31,  50.  At  elections 
of  directors  a majority  of  the  subscribed  stock  entitled  to  vote  must 
be  present,  each  share  has  one  vote,  voting  is  by  ballot,  cumulative 
voting  must  be  allowed,  and  votes  may  be  cast  in  person  or  by  proxy. 
§ 31.  Trustees  may  vote  in  their  representative  capacity.  § 27.  If 
by-laws  make  no  other  provision,  annual  meeting  must  be  held  on  the 
first  Tuesday  after  the  first  Monday  in  January,  and  two  weeks’  notice 
thereof  must  be  given  by  publication,  also  written  notice  must  be 
mailed  to  each  stockholder.  If  there  be  no  newspaper  published 
where  principal  office  is  located,  notice  is  to  be  posted  in  three  public 
places  in  the  neighborhood.  § 29. 

9.  Directors. 

Number.  Not  less  than  five  nor  more  than  eleven.  § 28.  May 
be  changed  within  these  limits  by  majority  vote  of  the  stockholders, 
but  a duly  certified  certificate  of  any  such  change  must  be  filed  forth- 
with in  the  Division  of  Archives.  § 6,  subdiv.  6.  May  be  removed 
by  two-thirds  vote  after  prescribed  procedure.  § 34. 

Qualifications.  Must  own  at  least  one  share  of  stock.  §§  28,  30. 
A director  ceasing  to  be  a stockholder  thereby  ceases  to  be  a 
director.  § 30.  Two  must  be  residents  of  the  Philippine  Islands. 
§ 30. 

Powers.  _ Exercise  all  the  corporate  powers  and  control  the  prop- 
erty and  business  of  the  corporation.  § 28. 

Liability.  No  specific1  liability  imposed  but  they  have  entire 
charge  of  the  corporate  property  and  business  (§  28)  and  would  there- 
fore be  liable  for  any  improper  distribution  of  the  corporate  stock- 
bonds  or  property  which  is  forbidden.  § 16.  Directors  may  be  re- 
moved by  a vote  of  two-thirds  of  the  voting  stock.  § 34. 

Meetings.  Must  meet  immediately  after  their  election  and  elect 
president  and  other  officers.  § 33.  (See  “ Officers.”)  A majority  is  a 
quorum.  § 32.  May  be  held  at  the  place  fixed  in  the  by-laws.  § 24. 


PHILIPPINE  ISLANDS. 


Executive  Committee.  No  provisions. 

10.  Officers. 

A president,  who  must  be  a director,  and  a secretary  or  clerk, 
who  must  be  a resident  of  the  Philippine  Islands,  and  a citizen  either 
of  the  Islands  or  of  the  United  States,  and  such  other  officers  as  are 
required  by  the  by-laws,  must  be  elected  by  the  directors  immediately 
after  their  own  election.  § 33.  Duties  are  to  be  prescribed  by  by- 
laws. §§  21,  33. 

11.  Principal  Office. 

Must  be  maintained  in  Philippine  Islands.  § 6,  subdiv.  3. 

12.  Corporate  Books. 

What  Required.  All  business  corporations  shall  keep  a record 
of  all  business  transactions  and  minutes  of  all  meetings  in  which 
shall  be  set  forth  in  detail  the  time  and  place  of  meetings,  how  author- 
ized, notice  given,  if  special  its  object,  those  present  and  absent  and 
every  act  thereof.  On  demand  the  time  of  entry  or  of  leaving  the 
meeting  by  any  director  or  stockholder  must  be  entered,  or  the  yeas 
and  nays  on  any  question  must  be  taken  and  recorded,  and  the  protest 
of  any  stockholder  or  director  must  be  entered  in  full  on  demand. 
§5L 

Also  a “ stock  and  transfer  book  ” must  be  kept,  containing  a 
record  of  all  stock,  the  names  of  stockholders  alphabetically  arranged, 
the  instalments  paid  and  unpaid  on  all  subscribed  stock  and  dates 
of  payment,  every  alienation  sale  or  transfer  of  stock  made,  the  date 
thereof  and  parties  thereto,  and  such  other  entries  as  the  by-laws 
may  provide.  § 52. 

Where  Kept.  Not  provided. 

Examination  of.  The  prescribed  books  and  records  and  the 
record  of  all  business  transactions  shall  be  open  to  the  inspection  of 
any  stockholder  or  director  at  reasonable  hours  and  for  a proper  pur- 
pose. §§  51,  52. 

13.  Reports. 

None  prescribed.  Governor  General  may  at  any  time  order  an 
investigation  of  the  business  affairs,  administration  and  condition  of 
any  corporation  doing  business  in  the  Philippines,  and  may  have 
stockholders,  directors  and  officers  examined  under  oath  and  may  have 
books  and  records  produced.  §§  54,  55. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  must 
obtain  a license  to  transact  business  in  the  Philippines  from  the  Chief 
of  the  Division  of  Archives,  etc.,  upon  order  of  the  Secretary  of  Com- 
merce and  Police.  No  such  order  for  license  shall  be  issued  by  the 
Secretary  except  upon  the  statement  under  oath  of  the  managing  agent 
of  the  corporation,  showing  to  the  satisfaction  of  the  Secretary  that 
the  corporation  is  solvent  and  in  sound  financial  condition,  and  set- 
ting forth  the  resources  and  liabilities  of  the  corporation  within  a 


PHILIPPINE  ISLANDS. 


number  of  days  to  be  fixed  by  the  Secretary  of  Finance  and  Justice, 
or  the  Secretary  of  Commerce,  as  the  case  may  be,  prior  to  the  date 
of  presenting  the  statement,  as  follows:  (i)  Name  of  the  corpora- 

tion; (2)  purposes  for  which  it  was  organized;  (3)  location  of  prin- 
cipal or  home  office;  (4)  capital  stock,  and  amount  actually  subscribed 
and  paid  into  the  treasury,  giving  date,  month  and  year;  (5)  net  assets 
of  the  corporation  over  and  above  all  obligations  outstanding,  giving 
date,  month  and  year;  (6)  name  of  resident  agent  authorized  by 
the  corporation  to  accept  service  of  summons  and  legal  process.  § 68. 

The  Secretary  of  Commerce  and  Police  may  in  his  discretion 
require  further  evidence  of  solvency  and  fair  dealing.  § 68. 

Upon  the  filing  in  the  Division  of  Archives,  etc.,  of  said  statement 
with  certified  copy  of  its  charter  and  the  order  of  the  Secretary  for  the 
issuance  of  the  license,  the  Chief  of  the  said  Division  of  Archives  shall 
issue  a license  to  do  business  in  the  Philippine  Islands,  and  shall 
collect  therefor  a fee  of  50  pesos.  § 68. 

The  Secretary  of  Commerce  and  Police  may  issue  license  without 
the  required  statement  to  any  foreign  corporation  which  has  been 
transacting  business  in  the  Philippines  for  more  than  three  years  prior 
to  the  passage  of  this  Act.  § 68. 

Penalties  for  Non-Compliance.  Not  permitted  to  sue  for  any 
debts,  claims  or  demands  whatsoever.  Any  officer,  agent  or  director 
of  the  corporation,  or  any  person  transacting  business  for  any  foreign 
corporation  not  having  the  prescribed  license,  shall  be  punished  by 
imprisonment  for  not  less  than  six  months  nor  more  than  two  years, 
or  by  a fine  not  less  than  200  pesos  nor  more  than  1,000  pesos,  or  by 
both  such  imprisonment  and  fine  in  the  discretion  of  the  court.  § 69. 

Ten  months  allowed  from  passage  of  act  for  foreign  corporations 
to  take  out  license.  § 70.  (Date  of  passage,  April  1,  1906.) 

The  Secretary  of  Commerce  and  Police  with  the  approval  of  the 
Governor  General  may  revoke  license  of  any  foreign  corporation  in 
case  of  insolvency  or  probable  loss  to  those  doing  business  with  it. 

Any  foreign  corporation  lawfully  doing  business  in  the  Philippines 
shall  be  bound  by  all  the  general  corporation  law,  except  as  it  pro- 
vides for  the  creation,  formation,  organization  or  dissolution  of  cor- 
porations, or  fixes  the  relations,  liabilities,  responsibilities  or  duties  of 
stockholders  or  officers  to  each  other  or  to  the  corporation. 

Books.  Foreign  corporations  must  keep  same  books  as  domestic 
corporations.  § 73.  (See  “ Corporate  Books.”) 

Reports.  (See  § 13.) 


PORTO  RICO. 

Enactments  of  1906. 


6.  Corporate  Powers. 

General.  An  injunction  to  suspend  the  general  and  ordinary  busi- 
ness of  a corporation  shall  not  be  granted  without  due  notice  of  the 
application  given  to  the  proper  officers  or  managing  agent,  except 
when  the  People  of  Porto  Rico  are  a party  to  such  proceeding.  L. 
1906,  An  Act  to  Define  Injunction,  etc.,  § 9,  p.  88. 


PORTO  RICO. 


1.  Corporation  Laws.* 

Organic  Act.  Contains  no  special  provisions  for  corporations. 

Statutes.  The  corporation  law  of  Porto  Rico  is  contained  in  Re- 
vised Statutes  and  Codes,  1902,  Title  II  of  the  Civil  Code.  Under 
the  general  law  corporations  may  be  formed  for  any  lawful  purpose 
or  purposes,  except  of  a savings  bank,  building  and  loan  association, 
insurance  company  or  of  a railroad,  telegraph,  telephone,  canal,  turn- 
pike or  other  company,  requiring  the  exercise  of  the  right  of  eminent 
domain.  § 35.  Banking  powers  are  expressly  prohibited.  § 33. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  Porto  Rico:  On  filing 

articles  of  incorporation,  15  cents  on  each  $1,000;  minimum  fee,  $25; 
maximum,  $500.  § 63;  Pol.  Code,  § 59.  For  issuing  certificate  of 

corporate  existence,  $3.  For  recording  articles,  20  cents  per  folio. 
For  copies,  same  fee.  For  affixing  certificate  and  seal  of  the  Island, 
$1.  Id. 

Franchise  Tax.  General  business  corporations  pay  no  annual 
franchise  tax. 

Local  Taxation.  Real  property  of  all  corporations  is  taxed  at 
one-half  of  one  per  cent,  of  its  value,  and  personal  property  at  one 
per  cent,  for  insular  revenue.  The  personal  property  is  exempt  from 
local  taxation.  Pol.  Code,  § 285.  Shares  of  stock  are  not  taxed  when 
the  property  of  the  company  is  either  exempt  or  taxed  to  the  cor- 
poration itself  as  above.  Id.,  § 291. 

General.  Fees  to  Secretary  of  Porto  Rico:  On  increase  of  capital 
stock,  15  cents  on  each  $1,000  of  increase;  minimum,  $25;  maximum, 
$500.  § 63.  On  filing  any  amendment  of  articles  of  incorporation, 

fees  are  the  same  as  on  filing  the  original  articles.  § 44.  For  filing 
notice  of  removal  of  place  of  business;  certificate  of  increase  or  de- 
crease of  capital  stock;  for  issuing  certificate  of  such  increase  or  de- 
crease, or  filing  and  recording  appointment  of  agent,  $5.  $3  for  filing 

and  $3  for  issuing  certificate  of  continuance  of  corporate  existence. 
Pol.  Code,  § 59. 

* Sections  given,  when  not  otherwise  noted,  are  of  Civil  Code. 


351 


352 


CLASSIFIED  CORPORATION  LAWS. 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more  persons  of  full  legal 
capacity.  § 35.  No  residential  requirements. 

Articles  of  Incorporation.  Must  be  subscribed  and  acknowledged 
by  each  of  the  incorporators  and  must  set  forth  (§  36)  : 

(1)  Name  of  the  corporation.  Similarity  of  names  for- 
bidden. 

(2)  Location,  including  town  or  city,  street  and  number, 
if  any,  of  its  principal  office  in  the  Island  of  Porto  Rico. 

(3)  Period,  if  any,  limited  for  its  duration. 

(4)  Object  or  objects  for  which  it  is  formed. 

(5)  Amount  of  total  authorized  capital  stock,  which  must, 
not  be  less  than  $2,000,  number  of  shares  into  which  it  is  di- 
vided, par  value  of  each  share,  and  amount  of  paid  in  capital, 
not  less  than  $1,000,  with  which  it  shall  commence  business. 

(6)  Names  and  post-office  addresses  of  the  incorporators, 
with  number  of  shares  subscribed  for  and  amount  of  sub- 
scription paid  in  by  each. 

(7)  Any  other  provision  desired  consistent  with  the  Code. 

Filing  and  Recording.  The  articles  of  incorporation  are  filed  and 
recorded  in  the  office  of  the  Secretary  of  Porto  Rico,  who  thereupon 
issues  a certificate  thereof.  § 37.  Before  beginning  business  an  au- 
thenticated copy  of  the  articles  must  also  be  filed  with  the  Treasurer 
of  Porto  Rico,  together  with  a statement,  verified  by  the  oath  of  the 
president  and  attested  by  a majority  of  the  directors,  stating  the  name 
of  the  corporation,  its  domicile,  and  the  kind  of  business  engaged  in, 
branches  established  and  the  commercial  registry  in  which  the  articles 
have  been  recorded.  Pol.  Code,  § 353. 

4.  Organization. 

First  Meetings.  Within  sixty  days  after  filing  of  articles  of  incor- 
poration, the  first  meeting  of  the  incorporators  must  be  called  by 
notice  subscribed  by  a majority  of  the  incorporators,  served  either 
personally  or  by  two  weeks’  publication  in  a newspaper  in  Porto 
Rico,  and  registered  mail.  But  notice  may  be  waived  in  writing.  § 38. 
At  least  three  directors  are  chosen  at  the  first  meeting  of  the  incor- 
porators, to  hold  office  not  less  than  one  year  from  the  date  of  such 
meeting.  § 38. 

By-Laws.  Are  adopted  by  the  incorporators  at  their  first  meet- 
ing, unless  the  power  is  conferred  on  the  directors  in  the  articles  of 
incorporation.  In  any  case  they  remain  subject  to  amendment  or 
repeal  by  the  stockholders.  § 3Q. 

Certificates.  At  least  $1,000  is  required  to  be  paid  in  on  the 
capital  before  commencing  business.  § 36.  Payment  of  this  and  sub- 


PORTO  RICO. 


353 


sequent  instalments  must  be  certified  to  the  Secretary  of  Porto  Rico 
within  ten  days  after  payment  is  made.  § 43. 

5.  Corporate  Existence. 

When  Commenced.  Corporate  existence  commences  on  filing  of 
the  articles  of  incorporation  in  office  of  Secretary  of  Porto  Rico, 
payment  of  fees,  and  issuance  of  his  certificate  of  filing.  § 37.  The 
duration  is  not  limited  by  law.  §§  32,  36.  Continues  for  the  purpose 
of  closing  affairs  after  expiration  or  annulment  of  charter.  § 54. 

Beginning  Business.  May  not  be  commenced  until  a copy  of  the 
articles  has  been  filed  with  Treasurer  of  Porto  Rico  (Pol.  Code, 
§ 353),  and  until  the  amount  of  capital  with  which  the  corporation 
is  to  begin  business  has  been  paid  in.  § 36. 

Renewal.  May  be  effected  by  regular  amendment  of  articles  of 
incorporation.  § 44. 

Forfeiture  of  Charter.  Corporations  may  be  dissolved  by  Legis- 
lative Assembly  of  Porto  Rico  at  its  pleasure.  § 34.  Forfeiture  of 
charter  may  be  declared  by  District  Court  on  failure  of  corporation 
to  bring  books  within  the  Island  of  Porto  Rico  when  ordered  by  the 
court.  § 41. 

Dissolution.  A corporation  may  be  dissolved  by  a two-thirds 
vote  of  the  stockholders,  signified  by  written  consent,  or  without 
meeting  by  unanimous  consent  in  writing  of  all  the  stockholders,  filed 
in  the  office  of  the  Secretary  of  Porto  Rico  who  issues  a certificate 
of  dissolution.  This  must  be  published  four  weeks  in  Porto  Rico 
newspaper.  § 53.  On  final  liquidation,  a copy  of  the  decree  is  filed 
in  the  office  of  the  Secretary  of  Porto  Rico.  § 60. 

6.  Corporate  Powers. 

General.  The  usual  general  powers  are  enumerated.  § 32.  Bank- 
ing powers  prohibited.  § 33. 

To  Hold  Property.  This  power  is  limited  to  amount  necessary 
to  accomplish  the  purposes  stated  in  the  articles  of  incorporation. 
§ 32.  Agricultural  corporations  may  not  hold  more  than  five  hundred 
acres  of  land.  Joint  Resolution  of  United  States  Congress,  May  1, 
1900.  Real  estate  acquired  as  security  for  debts  must  be  sold  within 
five  years.  Id. 

Its  Own  Stock.  Shares  of  stock  of  a corporation  be- 
longing to  the  corporation  may  not  be  voted.  § 49. 

Stock  of  Other  Corporations.  This  is  prohibited  as  to 
agricultural  corporations,  even  as  to  the  members  (Joint  Resolution, 
United  States  Congress,  May  1,  1900),  but  is  permitted  to  other  cor- 
porations to  a certain  extent.  § 45.  (See  under  § 7,  “Consideration 
for  Issue.”) 

To  Borrow  Money.  The  power  to  mortgage  property  and  fran- 
chises is  conferred  in  general  terms.  § 32.  But  corporate  indebted- 


354 


CLASSIFIED  CORPORATION  LAWS. 


ness  must  never  exceed  the  paid  up  value  of  the  capital  stock  or  the 
value  of  its  property  or  assets.  § 62. 

To  Do  Business  in  Other  States.  Permitted  broadly  if  provided 
for  in  articles  of  incorporation. 

Consolidation  or  Merger.  Is  not  provided  for. 

Amendment  of  Charter.  May  be  accomplished  by  a two-thirds 
vote  of  the  total  number  of  shares  issued,  such  vote  to  be  signified 
in  writing,  in  person  or  by  proxy,  and  to  be  certified  to  the  Secretary 
of  Porto  Rico  by  oath  and  acknowledgment  of  the  president  and 
secretary,  and  under  the  corporate  seal.  § 44. 

7.  Capital  Stock. 

Amount.  Must  not  be  less  than  $2,000.  § 36. 

Initial  Payment.  Must  not  be  less  than  $1,000,  and  is  to  be  speci- 
fied in  articles  of  incorporation.  § 36. 

Consideration  for  Issue.  Shall  be  nothing  but  money,  except  that 
any  corporation  may  purchase  property  necessary  for  its  business, 
and  stock  of  any  corporation  owning  such  property,  and  issue  stock 
therefor  to  the  amount  of  its  value.  Shares  so  issued  shall  be  full 
paid  stock,  and  in  the  absence  of  actual  fraud  the  judgment  of  the 
directors  as  to  the  value  of  the  property  is  conclusive.  Stock  so 
issued  to  be  reported  according  to  the  facts  and  not  as  issued  for 
cash.  §§  43,  45. 

Increase  or  Decrease.  Is  accomplished  by  regular  amendment. 
§ 44- 

Classes  of  Stock.  Are  not  expressly  provided  for. 

Par  Value  of  Shares.  Is  not  prescribed  but  is  to  be  stated  in 
articles  of  incorporation.  § 36. 

Stock  Certificates.  Every  stockholder  shall  have  a certificate 
signed  by  the  president  and  treasurer,  certifying  the  number  of  shares 
owned  by  him.  § 42. 

Transfer  of  Stock.  Is  made  on  the  books  of  the  company  as  the 
by-laws  may  provide.  § 42. 

8.  Stockholders. 

Rights  and  Powers.  Stockholders  control  amendments  and  dis- 
solution by  a two-thirds  vote.  §§  44,  53.  Three  may  call  meetings  in 
an  emergency  on  . 30  days’  notice.  § 42  a.  They  may  demand  divi- 
dends from  surplus  profits  in  January  unless  otherwise  determined 
by  them.  § 46. 

Liability.  They  are  liable  only  to  the  extent  of  unpaid  balance 
on  their  stock.  §§  42  b,  45. 


PORTO  RICO. 


355 


Meetings.  “In  all  cases  where  it  is  not  otherwise  provided  by 
law,  the  meetings  of  stockholders  of  every  corporation  * * must  be  held 
at  its  principal  office  in  the  Island  of  Porto  Rico.”  § 42  a.  Elections 
of  directors  must  always  be  held  there.  § 50. 

Notice.  The  articles  of  incorporation  or  by-laws  shall  determine 
time  and  manner  of  calling  and  conducting  meetings.  § 42.  Emer- 
gency meetings  may  be  called  by  three  stockholders  on  30  days’ 
notice.  § 42  a. 

Quorum.  Is  constituted  by  a majority  of  the  outstanding  shares. 
§§  42,  48. 

Voting.  May  be  by  proxy.  §§  42,  48.  Each  stockholder  is  en- 
titled to  one  vote  for  each  share  of  stock  owned  by  him.  § 42.  All 
elections  must  be  by  ballot  unless  otherwise  provided  in  articles  of 
incorporation.  § 48.  Cumulative  voting  for  directors  may  be  pro- 
vided for  in  articles  of  incorporation.  § 4Q.  No  share  of  stock  to  be 
voted  which  has  been  transferred  on  the  books  of  the  company  with- 
in twenty  days  before  the  election.  § 49. 

9.  Directors. 

Number.  The  directors  shall  not  be  less  than  three  in  number. 
§ 38.  They  may  be  classified,  none  to  hold  office  less  than  one  year, 
or  more  than  five  years.  At  least  one-fifth  must  be  elected  each  year. 
§ 40. 

Qualifications.  Directors  must  be  shareholders.  § 40.  At  least 
one  must  be  a resident  of  Porto  Rico.  § 38. 

Powers.  The  adoption  of  by-laws  may  be  delegated  to  them. 
§ 39.  Unless  otherwise  provided  in  the  by-laws,  they  fill  vacan- 
cies on  the  board,  and  among  officers.  § 40.  They  are  trustees  on 
dissolution  (§§  55,  56),  unless  other  persons  are  appointed  by  the 
District  Court.  § 57. 

Liability.  Directors  are  liable  for  making  any  dividend  except 
from  surplus  profits,  or  dividing  and  paying  capital  stock  in  any  man- 
ner except  as  provided  by  law.  § 46.  They  are  also  liable  for  any 
excess  of  debts  over  the  paid  up  capital  stock  or  the  value  of  the 
corporation’s  assets.  § 62.  They  may  be  punished  for  contempt  for 
not  obeying  order  of  District  Court  to  bring  books  of  corporation 
into  the  Island.  § 41.  The  Penal  Code  (Ch.  XI)  contains  similar 
and  additional  provisions  against  frauds,  etc. 

Meetings.  Directors’  meetings  may  be  held  outside  of  the  Island 
of  Porto  Rico,  if  so  provided  in  the  articles  of  incorporation  or  by- 
laws. § 41. 

Executive  Committee.  No  specific  provision,  but  may  undoubt- 
edly be  provided  for  in  by-laws.  §§  32,  40. 

10.  Officers. 

General.  Either  the  directors  or  the  stockholders,  as  the  by- 
laws prescribe,  may  choose  a president  from  among  the  directors, 


356 


CLASSIFIED  CORPORATION  LAWS. 


and  a secretary  and  treasurer,  each  of  whom,  must  be  shareholders. 
The  secretary  must  be  sworn,  and  is  to  keep  a record  of  all  votes 
and  resolutions  of  directors  and  stockholders.  The  treasurer  must 
give  a bond.  Vacancies  are  filled  by  directors  unless  by-laws  provide 
otherwise.  § 40. 

Liability.  The  president  and  secretary  or  treasurer  are  liable 
for  neglect  or  refusal  to  file  certificates  of  payment  of  capital  stock 
for  thirty  days  after  written  request  so  to  do  by  any  creditor  or  stock- 
holder. § 43.  For  any  false  certificate  or  public  notice  all  signers 
thereof  become  jointly  and  severally  liable.  § 61.  For  refusal  to 
allow  inspection  of  books  or  list  of  stockholders  for  elections,  the 
officer  or  officers  having  charge  of  such  books  or  list,  forfeits  $200, 
of  which  $100  goes  to  the  People  of  Porto  Rico  and  $100  and  costs 
to  the  person  suing.  § 4 7. 

11.  Principal  Office. 

Must  always  be  maintained  in  Porto  Rico  with  an  agent  in 
charge.  § 41.  Location  in  Island  may  be  changed  by  regular  amend- 
ment. § 44. 

12.  Corporate  Books. 

What  Required.  The  secretary  is  required  to  keep  a record  of 
all  votes  and  resolutions  of  the  directors  and  stockholders.  § 40. 
Stock  book  must  contain  names  and  addresses  of  stockholders  and 
the  number  of  shares  owned  by  each.  Transfer  book  must  be  kept. 
§ 47- 

Where  Kept.  All  books,  except  the  stock  and  transfer  books, 
which  must  be  kept  at  principal  office  on  the  Island,  may  be  kept 
outside  Porto  Rico  if  so  provided  in  the  by-laws  or  articles  of  incor- 
poration. But  the  District  Court  may  order  all  books  to  be  brought 
into  Porto  Rico,  on  penalty  of  forfeiture  of  charter.  § 41. 

Examination  of.  Stock  and  transfer  books  are  to  be  open  to 
inspection  of  stockholders  during  business  hours.  § 47.  For  each 
election  an  alphabetical  list  of  all  the  stockholders  entitled  to  vote, 
showing  name  and  residence  and  number  of  shares  of  each,  must  be 
kept  open  for  examination  at  least  ten  days  before  the  election.  § 47. 
The  corporate  books  shall  be  the  only  evidence  as  to  who  are  stock- 
holders and  entitled  to  vote,  or  to  examine  the  same.  § 47. 

13.  Reports. 

Every  corporation  shall  annually  within  the  month  of  July  file 
a report  authenticated  by  the  signatures  of  the  president  and  one 
other  officer,  or  by  any  two  directors,  stating:  (1)  Name  of  the  cor- 

poration. (2)  Location,  town  or  city,  street  and  number,  if  any,  of 
its  principal  office  in  Porto  Rico,  and  if  a foreign  corporation,  the 
name  of  the  agent  on  whom  process  may  be  served.  (3)  Object  or 
objects  of  its  business.  (4)  Amount  of  authorized  capital  stock; 


PORTO  RICO. 


357 


amount  actually  issued  and  outstanding;  amount  actually  paid  in;  a 
statement  of  existing  liabilities.  (5)  Names  and  post-office  addresses 
of  all  directors  and  officers  and  the  time  when  term  of  office  of 
each  expires.  (6)  Date  appointed  for  next  annual  meeting  for  election 
of  directors.  (7)  Whether  a transfer  book  and  stock  book  as  pre- 
scribed (specifying  terms)  have  been  kept  at  the  principal  office  in 
Porto  Rico  open  to  inspection  as  required  by  law.  § 52.  Penalty  for 
failure  to  file  such  report  is  fine  of  $200.  § 52.  Additional  reports 

may  be  called  for  by  Treasurer  of  Porto  Rico  (Pol.  Code,  § 319); 
also  by  assessor  of  district.  Id.,  § 316. 

Within  ten  days  of  the  payment  of  any  instalment  of  capital 
stock,  a certificate  stating  the  amount  paid,  whether  in  cash  or  prop- 
erty, and  also  total  amount  previously  paid  and  reported,  must  be 
sworn  to  by  the  president  and  secretary,  or  treasurer,  and  be  filed 
with  the  Secretary  of  Porto  Rico.  § 43. 

Publication  is  required  for  the  usual  notices.  Publication  as 
prescribed  for  dissolution  and  for  sale  of  delinquent  stock  can  not 
be  avoided. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation  be- 
fore doing  business  within  the  Island,  must  file  in  the  office  of  the 
Secretary  of  Porto  Rico  a duly  authenticated  copy  of  its  charter  or 
articles  of  incorporation  (§  65),  and  also  a statement  verified  by  the 
oath  of  its  president  and  secretary  and  attested  by  a majority  of  its 
board  of  directors,  showing:  (1)  Name  of  the  corporation  and  loca- 

tion of  its  principal  office  or  place  of  business  without  the  Island, 
and  if  it  is  to  have  any  place  of  business  or  principal  office  within  the 
Island,  the  location  thereof.  (2)  Amount  of  its  capital  stock.  (3) 
Amount  of  capital  stock  actually  paid  in  in  money.  (4)  Amount  of 
capital  stock  paid  in  in  any  other  way  and  in  what.  (5)  Amount  of 
assets  and  of  what  they  consist,  with  their  actual  cash  value.  (6) 
Liabilities  of  the  corporation  and  if  any  of  them  are  secured,  how 
secured,  and  upon  what  property.  § 65. 

Also  a certificate  by  the  president,  or  acting  head,  and  the  secre- 
tary, under  the  corporate  seal,  consenting  to  be  sued,  and  that  ser- 
vice of  process  may  be  made  on  a named  person,  resident  of  the 
Island,  whose  place  of  residence  must  be  at  the  principal  place  of 
business  of  the  corporation  and  must  be  designated  in  the  certificate. 
§ 66.  Also  a written  consent  of  the  person  so  designated  to  act  as 
such  agent.  § 67.  Fee  for  filing  appointment  of  agent,  $5.  Pol.  Code, 
§ 59.  A license  fee  of  $25  is  also  paid  to  the  Treasurer  of  Porto  Rico, 
on  obtaining  license  from  him,  and  annually  thereafter  on  or  before 
July  1st  of  each  year,  to  renew  such  license.  Pol.  Code,  § 353. 

Penalties  for  Non-Compliance.  Fine  of  $10  for  each  day  such 
corporation  continues  to  do  business  in  the  Island  without  filing  such 
papers.  § 68.  They  are  liable  to  the  same  penal  provisions  applicable 
to  domestic  corporations.  Penal  Code,  § 498. 

Taxation.  Is  the  same  as  of  domestic  corporations  (Pol.  Code, 
§§  285,  320),  but  only  such  part  of  the  capital  is  considered  as  is  em- 
ployed in  the  transaction  of  business  in  Porto  Rico,  and  the  amount 


358 


CLASSIFIED  CORPORATION  LAWS. 


(Porto  Rico) 

of  such  capital  is  in  no  case  to  be  less  than  the  value  of  the  real 
and  personal  property  owned  in  Porto  Rico,  including  franchises  and 
concessions.  § 320. 

Books.  Must  keep  stock  and  transfer  books  at  principal  office  on 
the  Island.  § 52. 

Reports.  Within  twenty  days  from  July  1st  of  each  year,  every 
foreign  corporation  must  make  and  file  in  the  office  of  the  Secretary 
of  Porto  Rico  a report  similar  in  form  and  contents  to  the  annual 
report  required  of  domestic  corporations.  §§  52,  69.  Same  tax  re- 
turns may  be  required  as  of  domestic  corporations.  Pol.  Code,  §§  316- 
320. 

15.  Combinations  and  Monopolies. 

While  there  are  no  statutes  directly  aimed  at  trusts  and  monopo- 
lies, there  is  a tendency  to  restrictive  legislation,  as  shown  by  the 
prohibitions  against  any  combination  of  agricultural  corporations. 
R.  S.  XXXIV;  Joint  Resolution,  May  1,  1900. 


RHODE  ISLAND. 

Enactments  of  1906. 


3.  Incorporation. 

Articles  of  Agreement.  Under  the  Statutes  (Revised  Statutes 
1896,  Ch.  176,  § 9)  provision  may  be  made  in  the  articles  of  agree- 
ment that  the  corporation  shall  have  a lien  on  stock  of  the  company 
in  the  hands  of  a stockholder  for  assessments,  or  for  indebtedness  of 
the  stockholder  to  the  company,  such  lien  to  be  enforcible  in-  such 
manner  as  the  by-laws  may  provide;  also  that  on  sale  of  stock  for 
default  in  payment  of  any  such  indebtedness  to  corporation,  the  cor- 
poration shall  have  prior  right  to  purchase  such  stock  and  may  pre- 
scribe the  time  within  which  this  right  shall  be  exercised.  The 
amendments  of  1906  provide  that  if  such  provisions  for  lien  on  stock 
and  prior  right  of  purchase  have  not  been  incorporated  in  the  original 
articles  of  agreement,  they  may  be  included  therein  by  amendment  of 
said  articles.  L.  1906,  Ch.  1326,  p.  42. 

6.  Corporate  Powers. 

Tc  Hold  Property. 

Its  Own  Stock.  In  case  provisions  have  been  omitted  from 
the  original  articles  of  agreement  giving  corporation  power  to  purchase 
its  own  stock  on  sale  for  default  in  debt  of  stockholder  to  corpora- 
tion, such  provisions  may  be  incorporated  in  the  articles  of  agree- 
ment by  amendment.  L.  1906,  Ch.  1326,  p.  42. 

Amendment  of  Charter.  Articles  of  agreement  may  be  amended 
to  give  corporation  lien  on  its  stock  in  the  hands  of  any  defaulting 
debtor  and  prior  right  to  purchase  such  stock  on  sale  of  same  for  such 
defaulted  indebtedness.  L.  1906,  Ch.  1326,  p.  42. 


>> 


RHODE  ISLAND. 


1.  Corporation  Laws.* 

Constitution.  (1899.)  Corporations,  except  those  with  power  of 
eminent  domain,  may  be  created  under  general  laws.  Art.  IV,  § 15. 

Statutes.  The  corporation  law  of  Rhode  Island  is  found  in  Title 
XIX  of  Revised  Statutes,  1896,  of  which  Chapters  176  and  177  con- 
tain general  provisions,  Chapter  180  treats  specially  of  manufactur- 
ing companies,  and  the  remaining  chapters  of  banks,  insurance,  surety, 
railroad,  and  building  and  loan  corporations.  Incorporation  under 
the  general  law  is  limited  to  “ ordinary  business  corporations  ” (Ch. 
176,  § 2)  and  literary,  religious,  social  corporations,  and  the  like. 
Id.,  § 11. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  State  Treasurer:  One-tenth  of  one 
per  cent,  on  the  amount  of  capitalization  with  a minimum  fee  of  $100. 
Ch.  29,  § 16;  Ch.  176,  §3.  To  Secretary  of  State  for  issuing  certificate, 
$1.  Ch.  176,  § 4. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Any  town  or  city  may  offer  exemption  from 
taxation  for  ten  years  to  induce  manufacturing  corporations  to  estab- 
lish in  its  limits.  Ch.  44,  §§4,  5.  Stock  is  not  taxed  in  hands  of  the 
stockholders  if  the  corporation  is  taxed  on  real  and  personal  property 
equal  in  amount  to  the  market  value  of  its  stock.  If  the  corporation 
is  taxed  for  a less  amount,  the  shareholders  are  taxed  proportionately 
for  the  difference  between  the  market  value  of  their  stock  and  the 
amount  for  which  the  corporation  was  last  taxed.  Ch.  45,  § 9,  as 
amended  by  L.  1905,  p.  80.  (See  § 13,  “ Reports.”) 

General.  On  increase  of  stock,  one-tenth  of  one  per  cent,  on  the 
amount  of  increase.  Ch.  29,  § 16;  Ch.  176,  § 7.  To  tax  assessors  for 
appraisal  of  manufacturing  property  taken  in  payment  of  stock,  $10 
and  expenses.  Ch.  180,  § 9. 

3.  Incorporation. 

Incorporators.  May  be  any  three  or  more  persons  of  lawful  age. 
Ch.  176,  § 2.  No  requirements  as  to  residence. 

* References  are  to  Revised  Statutes,  1896,  unless  otherwis:  noted. 


359 


CLASSIFIED  CORPORATION  LAWS. 


360 


Articles  of  Agreement.  Must  be  signed  and  acknowledged  by 
each  of  the  incorporators,  with  the  residence  of  each  set  opposite  his 
signature  (Ch.  176,  §3),  and  must  contain  (Ch.  176,  §2): 

(1)  Agreement  to  constitute  an  ordinary  business  corpora- 
tion. 

(2)  Name,  which  must  not  be  one  which  can  be  mistaken 
for  a partnership;  nor  one  then  in  use  by  any  existing  corpo- 
ration of  the  State. 

(3)  Business  for  which  constituted. 

(4)  Town  or  city  in  which  located. 

(5)  Amount  of  capital  stock,  whether  common  or  preferred, 
and  how  much  of  each;  par  value  of  shares,  and  if  any  pre- 
ferred, the  advantages  thereof  over  the  common  stock.  Cap- 
ital stock  and  par  value  of  shares  may  be  any  desired  amount. 

Filing  and  Recording.  The  articles  of  agreement,  with  certificate 
of  State  Treasurer  that  incorporation  fee  has  been  paid,  are  filed  with 
the  Secretary  of  State,  who  thereupon  issues  certificate  of  incorpora- 
tion, in  form  prescribed  by  statute.  Ch.  176,  §§  3,  4. 

4.  Organization. 

First  Meetings.  The  statutes  do  not  authorize  meetings  of  the 
stockholders  without  the  State.  The  first  meeting  is  called  by  notice 
stating  the  time,  place  and  purpose  thereof  and  signed  by  one  or  more 
of  the  incorporators,  mailed  at  least  five  days  before  the  meeting. 
Such  notice  may  be  waived  by  written  consent  of  all  the  incorpora- 
tors. The  notice,  or  waiver,  must  be  filed  and  recorded  in  the  cor- 
porate records.  Ch.  176,  §6.  At  this  meeting,  as  a matter  of  practice, 
by-laws  are  adopted  and  directors  are  elected.  Officers  may  be 
elected  by  the  stockholders  or  directors  as  prescribed  by  the  by-laws. 
A resident  clerk,  treasurer  or  agent  must  be  elected  forthwith.  Ch. 
177,  §21;  L.  1902,  Ch.  975. 

By-Laws.  May  determine  the  manner  of  calling  and  conducting 
meetings;  number  of  shares  to  constitute  a quorum;  voting  power  of 
shares;  mode  of  voting  by  proxy;  mode  of  selling  stock  for  non- 
payment of  assessments,  or  other  indebtedness  of  shareholders  to  the 
corporation;  tenure  of  officers,  and  suitable  penalties  for  breach  of 
by-laws,  not  exceeding  $20.  Ch.  177,  §3.  The  other  usual  details  of 
corporate  procedure  are  also  provided  for  by  the  by-laws. 

Certificates.  Within  thirty  days  after  organization,  a certificate, 
verified  by  the  treasurer  or  other  authorized  officer,  must  be  filed  with 
the  Secretary  of  State,  setting  forth:  The  name  of  the  corporation; 
date  of  organization;  amount  of  capital  stock  paid  in  on  organization; 
town  of  its  location,  and  name  and  address  of  its  treasurer.  Ch. 
T-77,  § 24. 

Every  corporation  must  upon  election  file  with  the  Secretary  of 
State,  the  name  and  address  of  its  treasurer,  if  he  be  a resident  of  the 


RHODE  ISLAND. 


36l 


State;  and  if  he  is  a non-resident,  then  a copy  of  power  of  attorney, 
duly  authenticated,  appointing  some  competent  person  residing  in  the 
State  as  its  attorney  to  receive  service  of  process.  Ch.  176,  § 16;  L. 
1902,  Ch.  975.  Certificates  of  payments  of  capital  stock  must  be 
recorded  with  the  town  clerk  in  which  main  factory  is  established, 
within  ten  days  after  last  payment,  with  certificate  of  tax  assessors 
as  to  value  of  property  taken  in  payment.  Ch.  180,  §§  2,  8-10. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  of  incorporation 
by  Secretary  of  State.  Ch.  176,  § 5.  Is  perpetual  when  no  other  pro- 
vision is  specifically  made.  Ch.  177,  § 1.  Continues  three  years  after 
expiration  or  annulment,  to  settle  corporate  affairs.  Ch.  177,  § 9. 

Beginning  Business.  May  be  commenced  forthwith.  Ch.  177, 

§23. 


Renewal.  There  are  no  statutory  provisions  for  renewal,  the  law 
contemplating  perpetual  existence.  Ch.  176,  § 7. 

Forfeiture  of  Charter.  Charter  becomes  void  on  failure  to  organ- 
ize within  two  years  from  incorporation.  Ch.  177,  §23.  For  failure 
for  one  year  to  maintain  resident  agent,  dissolution  may  be  decreed. 
L.  1902,  Ch.  975. 

Dissolution.  When  a corporation  is  insolvent,  or  when  through 
absence  of  its  executive  officers  from  the  State  and  failure  of  the 
stockholders  to  hold  meetings  or  attend  to  its  concerns,  extending 
over  an  unreasonable  time,  the  estate  or  concerns  of  the  corporation 
are  being  misapplied,  wasted  or  lost,  or  for  any  act  or  omission  in 
contravention  of  law,  the  appellate  division  of  the  supreme  court  may 
decree  dissolution  and  appoint  receiver  on  application  of  any  stock- 
holder or  creditor,  after  reasonable  notice.  Ch.  177,  §§  27-30. 

No  provision  for  voluntary  dissolution  under  the  statutes.  A 
majority  of  the  stockholders  may  surrender  the  franchises.  Wilson 
v.  Central  Bridge,  9 R.  I.  590. 

6.  Corporate  Powers. 

General.  Usual  common  law  powers  are  enumerated.  Ch. 
177,  § 1. 

To  Hold  Property.  This  power  is  conferred  without  limitation. 
Ch.  1 77,  § I- 

Its  Own  Stock.  Articles  of  agreement  may  provide 
that  on  sale  of  stock  for  default  in  debt  of  stockholder  to  corporation, 
the  corporation  shall  have  prior  right  to  purchase  such  stock,  and  may 
limit  the  time  within  which  the  corporation  must  exercise  such  right. 
Ch.  176,  §9. 

Stock  of  Other  Corporations.  No  statutory  provision. 

To  Borrow  Money.  No  provisions  except  as  to  manufacturing 
companies,  whose  debts  must  not  exceed  the  amount  of  capital  stock 
actually  paid  in.  Ch.  180,  § 15. 


362 


classified  corporation  laws. 


To  Do  Business  in  Other  States.  Is  permitted,  if  a place  of  busi- 
ness is  maintained  in  the  State  with  a resident  agent.  Ch.  177,  §21. 
All  records  of  transfer  of  stock  must  be  made  and  kept  within  the 
State  in  charge  of  a resident  recording  officer.  Id.,  § 19.  But  con- 
tinued absence  from  the  State  of  executive  officers,  when  also  the 
stockholders  fail  to  hold  meetings  and  attend  to  the  corporate  con- 
cerns, may  be  ground  for  dissolution.  Id.,  § 27. 

Consolidation  or  Merger.  No  statutory  provisions. 

Amendment  of  Charter.  May  be  effected  in  any  particular  by  a 
majority  vote  of  the  stock.  A certificate  of  the  vote  attested  by  the 
president  and  secretary  must  be  filed  with  Secretary  of  State.  Ch. 
176,  §7;  Ch.  180,  §4,  amended  by  L.  1902;  Ch.  1052. 

7.  Capital  Stock. 

Amount.  Not  prescribed.  Must  be  stated  in  articles  of  agree- 
ment and  certificate  of  incorporation.  Ch.  176,  §§  2,  4. 

Initial  Payment.  Not  prescribed. 

Consideration  for  Issue.  Must  be  money  or  its  equivalent,  except 
in  case  of  manufacturing  plants.  A manufacturing  plant  may  be  paid 
for  in  capital  stock  at  valuation  to  be  appraised  by  assessors  of  taxes 
of  the  town  in  which  it  is  situated.  Ch.  180,  § 8.  And  the  sworn 
appraisal  must  be  recorded  with  the  officers’  certificate  of  payment  of 
capital  stock,  in  order  to  relieve  holders  of  stock  so  issued  from  lia- 
bility for  corporate  debts.  Id.,  § 10.  No  note  or  obligation  of  a 
stockholder,  whether  secured  or  not,  shall  be  considered  as  payment 
of  any  part  of  the  capital  stock.  Id.,  § 7. 

Increase  or  Decrease.  May  be  effected  by  a majority  vote  of  the 
stock,  at  a meeting  duly  called  for  that  purpose,  with  certificate  there- 
of, duly  attested  by  the  president  and  secretary,  stating  the  vote,  the 
amount,  par  value  and  kinds  of  the  additional  stock,  and  the  advan- 
tages of  the  preferred  stock,  if  any.  Ch.  176,  §§7,  8;  Ch.  180,  §4; 
L.  1902,  Ch.  1052. 

Within  thirty  days  after  increase,  certificate  of  payment  thereof 
must  be  filed  with  Secretary  of  State.  Ch.  177,  § 24.  (See  § 4,  “Or- 
ganization.”) Certificate  of  decrease  must  be  recorded  within  ten 
days.  Ch.  180,  § 4. 

Classes  of  Stock.  May  be  provided  for  in  original  or  amended 
articles  of  agreement.  There  are  no  restrictions.  Ch.  176,  §§  2,  7. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Not  prescribed  as  to  form,  execution  or  de- 
livery. 

Transfer  of  Stock.  Endorsement  and  delivery  of  certificate  is 
sufficient  transfer  as  to  all  parties,  except  the  corporation.  Ch.  177, 
§ 20.  To  determine  rights  to  dividends,  transfer  must  be  made  on  the 
books  of  the  corporation  within  the  State.  Id.,  §§  19,  20. 


RHODE  ISLAND. 


363 


8.  Stockholders. 

Rights  and  Powers.  By  majority  vote  they  control  amendments. 
L.  1902,  Ch.  1052.  Three  or  more  may  call  meetings  on  warrant  of 
justice  of  the  peace.  Ch.  177,  § 5. 

Liability.  Stockholders  whose  stock  has  not  been  paid  for  up 
to  its  full  par  value  are  liable  for  the  unpaid  amount.  Ch.  180,  §§  1, 
13;  L.  1901.,  Ch.  839.  Recovery  may  be  had  in  equity  aetion,  or  in 
action  of  debt  on  judgment  obtained  against  corporation  (Ch.  180, 
§22),  and  stockholder  has  right  to  enforce  contribution.  Id.,  §23. 

Meetings.  No  statutory  authority  for  holding  stockholders’ 
meetings  outside  the  State.  An  annual  meeting  must  be  held  for  the 
election  of  officers.  Ch.  177,  § 7.  If  no  one  is  legally  qualified  to  call 
meeting,  the  stockholders  may  obtain  authority  from  justice  of  peace. 
Id.,  § 5.  Notice,  quorum,  voting  and  proxies  to  be  governed  by  by- 
laws. Id.,  § 3.  Voting  by  attorney  is  authorized.  Id.  But  quorum 
must  be  at  least  a majority.  Lockwood  v.  Bank,  9 R.  I.  308. 

9.  Directors. 

Number.  Qualifications.  Powers.  No  specific  provisions. 

Liability.  For  declaring  or  paying  any  dividend  when  the  com- 
pany is  insolvent  or  which  renders  it  insolvent,  and  for  permitting 
corporate  debts  to  exceed  amount  of  paid  capital  stock,  directors  of 
manufacturing  companies  are  jointly  and  severally  liable  for  corpor- 
ate debts  then  existing  or  contracted  while  they  remain  in  office. 
Dissenting  directors  exonerate  themselves  in  the  first  case  merely 
by  filing  written  objection  with  clerk  of  corporation;  but  in  the  latter 
they  must  call  a meeting  of  the  stockholders  to  state  their  objections. 
Ch.  180,  §§  6,  15,  16.  Same  liability  exists  for  loans  to  stockholders. 
Id.,  § 7.  For  failure  to  file  certificate  of  payment  of  capital  stock  and 
of  reduction  of  stock  within  ten  days  thereafter  they  are  liable  for  all 
debts  contracted  until  such  filing.  Id.,  §§  3,  4;  Legg  v.  Dewing,  25  R. 
I.  568  (1903).  (See  § 10,  “ Officers.”) 

Meetings.  No  specific  provisions.  The  law.  in  various  provisions 
contemplates  absence  from  State  of  officers  and  directors.  Ch.  177, 
§§  19,  21,  27.  If  meetings  outside  the  State  are  desired,  provision 
should  be  made  therefor  in  the  by-laws.  Id.,  § 3.  No  statutory  pro- 
visions as  to  notice  or  quorum,  but  the  courts  hold  that  a majority 
is  necessary  to  constitute  a quorum.  Lockwood  v.  Bank,  9 R.  I.  308. 

Executive  Committee.  No  provisions. 

10.  Officers. 

General.  A treasurer  is  required.  If  he  is  a non-resident,  a 
resident  agent  must  be  appointed.  Ch.  176,  §16;  Ch.  177,  §21.  A 
president  and  a secretary  are  also  necessary  under  the  requirements 
of  the  statutes.  The  recording  officer  must  be  a resident  and  keep 
records  of  transfers  of  stock  in  the  State.  Ch.  177,  §§  19,  21. 


364 


CLASSIFIED  CORPORATION  LAWS. 


(Rhode  Island) 

Liability.  Officers  of  manufacturing  companies  are  liable  for  any 
false  certificates  or  public  notice,  to  the  extent  of  all  corporate  debts 
contracted  while  they  remain  in  office  or  remain  stockholders.  Ch. 
180,  § 20.  Actions  to  enforce  liability  of  officers  and  directors  may 
be  brought  while  action  is  pending  against  corporation  for  the  same 
debt.  Id.,  §21.  Officers  or  agents  of  a corporation  who  issue  stock 
or  stock  certificates  fraudulently  are  liable  to  fine  and  imprisonment. 
Ch.  279,  § 20. 

11.  Principal  Office. 

Must  be  maintained  within  the  State  with  a treasurer  or  resident 
agent  in  charge.  The  stock  transfer  books  must  be  kept  therein. 
Ch.  1 77,  §§  19,  21. 

12.  Corporate  Books. 

All  records  of  transfers  of  stock  must  be  made  and  kept  within 
the  State.  Ch.  177,  § 19. 

13.  Reports. 

Where  treasurer  is  a resident  of  the  State,  his  name  and  address 
must  be  filed  with  the  Secretary  of  State  forthwith  upon  his  election. 
If  treasurer  is  a non-resident,  a power  of  attorney  to  a resident  agent 
must  be  so  filed.  Ch.  176,  § 16.  Certificates  of  payments  of  capital 
stock  are  also  required  to  be  filed  (Ch.  177,  §24;  Ch.  180,  §2),  but  no 
regular  annual  report.  Town  assessor  may  require  any  corporation 
to  file  return  of  its  shares  held  by  any  person  in  his  district,  stating 
par  and  cash  market  value  of  such  shares  and  the  proportionate 
amount  per  share  at  which  the  corporate  property  was  last  assessed. 
Ch.  46,  §§  11,  12;  L.  1905,  p.  81. 

Publication  is  required  only  of  notice  of  stockholders’  meetings, 
which  may  be  waived,  or  avoided  by  personal  notice.  Ch.  176,  §6; 
Ch.  1 77,  §4- 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  A foreign  corporation  before 
doing  business  in  the  State,  must  appoint  by  written  power  some 
competent  person,  resident  in  the  State,  as  its  attorney  to  accept 
service  of  process  against  the  corporation.  A copy,  duly  authenti- 
cated, must  be  filed  with  the  Secretary  of  State.  L.  1902,  Ch.  980; 
G.  L.,  Ch.  253,  § 37.  Foreign  insurance,  surety,  express,  and  building 
and  loan  companies  have  special  provisions.  Chs.  182,  185,  189. 

Penalties  for  Non-Compliance.  Inability  to  sue  in  the  State 
courts  on  any  contract  made  in  the  State  (Ch.  253,  § 36)  and  fine  of 
$1,000  against  any  person  representing  such  corporation.  Id.,  §41; 
McLeod  v.  Putnam,  24  R.  I.  500  (1902);  Crowley  v.  Walton,  23  R.  I. 
331  (1901). 

No  other  provisions  relating  to  foreign  corporations. 

15.  Combinations  and  Monopolies. 

No  statutory  provisions. 


SOUTH  CAROLINA. 

Enactments  of  1906. 


6.  Corporate  Powers. 

General.  Merchants  and  corporations  when  indebted  are  pro- 
hibited from  sale  of  entire  assets  except  in  the  ordinary  course  of 
trade,  save  with  certain  formalities  designed  to  protect  the  rights  of 
creditors.  L.  1906,  Act  No.  1.  p.  1. 

9.  Directors. 

Number.  An  unlimited  number  of  directors  are  permitted  for 
banking,  shipbuilding  and  trust  corporations,  and  these  directors  may 
be  divided  into  two  classes,  advisory  and  active.  C.  C.  1996a;  Act 
Feb.  20,  1902;  23  Stats.  1038.  By  an  addition  to  this  act,  insurance 
companies  are  included  among  the  corporations  so  empowered.  L. 
1906,  Act  No.  40,  p.  54. 


SOUTH  CAROLINA. 


1.  Corporation  Laws.* 

Constitution.  (1895.)  All  business  corporations  to  be  created 
under  general  laws  (Art.  IX,  § 2)  and,  except  mercantile  corporations, 
to  maintain  at  least  one  public  office  in  the  State  and  at  least  one 
agent  on  whom  process  may  be  served.  Id.,  §4.  No  foreign  cor- 
porations may  construct  or  operate  railroads  in  the  State,  unless  re- 
incorporated in  the  State.  Id.,  § 8.  Banks  shall  not  be  created  by 
special  act.  Id.,  § 9.  Stocks  or  bonds  not  to  be  issued  save  for  labor 
done,  or  money  or  property  actually  received,  and  all  fictitious  issues 
declared  void.  Id.,  § 10.  Cumulative  voting  prescribed.  Id.,  §11. 
No  corporation  to  engage  in  any  business  except  as  authorized  in 
charter.  Id.,  § 12.  General  assembly  to  enact  laws  to  prevent  all 
trusts,  etc.,  with  penalty  of  forfeiture  of  franchises.  Id.,  § 13.  Stock- 
holders of  general  corporations  to  be  liable  for  corporate  debts  only 
to  extent  of  balance  due  on  stock.  Id.,  § 18.  Commissions  to  be 
appointed  for  supervision  of  corporations.  Id.,  §§  9,  13,  14.  Circum- 
vention of  these  provisions  by  controlling  any  other  corporation  pro- 
hibited. Id.,  § 19. 

Statutes.  The  corporation  law  of  South  Carolina  is  contained  in 
the  Civil  Code  of  1902,  Title  XII,  of  which  Chapters  4 7 and  48  con- 
tain general  provisions;  Ch.  43  refers  to  banks  and  banking;  Ch.  44 
to  foreign  corporations;  Ch.  45  to  insurance  companies;  Ch.  46  to 
fraternal  beneficial  associations;  Ch.  49  to  municipal  corporations; 
Ch.  50  to  railroads;  Ch.  51  to  telegraph,  telephone,  express  and  steam- 
boat companies;  Ch.  52  to  joint  stock  companies;  and  Ch.  53  to  drain- 
age corporations.  Amendments  are  found  in  L.  1903,  1904  and  1905. 

Under  the  general  provisions  corporations  may  be  formed  for 
any  lawful  purpose  except  railroad,  turnpike  and  canal  companies. 
§ 1880. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  For  recording 

declaration,  $3  (§  1881) ; on  issuing  charter,  one  mill  on  each  dollar 
($1  on  each  Si, 000)  of  authorized  capital  stock  up  to  and  including 
$100,000;  one-half  mill  on  each  dollar  over  $100,000  and  up  to  and 
including  $1,000,000;  one-fourth  of  a mill  on  each  dollar  of  authorized 
capital  stock  exceeding  $1,000,000  (§  1888);  on  filing  return,  $3 

(§  1884);  for  recording  each  declaration,  petition  or  return,  precedent 

* References,  except  as  otherwise  noted,  are  to  sections  of  the  Civil  Code  (1902). 


36s 


366 


Classified  corporation  laws. 


to  granting  charter,  $2.50  for  each  paper  (§  1888);  in  addition  to  re- 
cording fees,  $5  for  each  charter  issued.  L.  1905,  Act  437. 

Franchise  Tax.  Business  corporations  must  pay  to  the  Comp- 
troller General,  on  or  before  the  first  day  of  April  of  each  year,  an 
annual  license  fee  of  one-half  of  one  mill  on  each  dollar  of  paid  up 
capital;  minimum  fee,  $5.  L.  1905,  Act  407,  § 4.  (See  § 13,  “Reports.”) 

Local  Taxation.  Corporations  are  to  return  property  owned  in 
the  State,  in  same  manner  as  individuals;  and  if  property  tax  is  paid 
by  the  corporation,  shareholders  are  not  taxed  on  stock.  §§  304-306. 

General.  On  renewal  of  charter  and  on  increase  of  stock  (§  1851), 
same  fee  as  on  original  incorporation.  §§  1879,  1888.  For  each  amend- 
ment of  charter,  renewal,  increase  or  decrease  of  stock,  or  any  other 
paper  required  by  law  to  be  filed,  $2.50.  § 1888. 


3.  Incorporation. 

Incorporators.  Must  be  two  or  more.  § 1880.  No  requirements 
as  to  residence. 

Formation. 

1.  Declaration  for  Charter.  Is  subscribed  by  the  incorpor- 
ators. The  form  is  supplied  by  Secretary  of  State,  and  sets  forth 
(§  1880)  : 

(1)  Names  and  residences  of  the  petitioners. 

(2)  Name  of  the  proposed  corporation.  Must  be  different 
from  that  of  any  existing  corporation. 

(3)  Place  where  it  proposes  to  have  its  principal  place  of 
business,  if  any,  or  to  be  located.  Must  be  definitely  stated, 
but  street  and  number  may  be  omitted. 

(4)  General  nature  of  the  business  which  it  proposes  to 
do. 

(5)  Amount  of  capital  stock,  and  how  and  when  pay- 
able. Preferred  stock  may  be  provided  for  by  merely  stat- 
ing proportion  to  have  preference. 

(6)  Number  of  shares  into  which  the  capital  stock  is  to 
be  divided,  and  par  value  of  each  share. 

(7)  Any  other  matter  which  it  may  be  desirable  to  set 
forth. 

2.  Filing  and  Recording.  On  the  filing  and  recording  of 
this  declaration,  the  Secretary  of  State  issues  to  the  parties,  or 
to  two  or  more  of  them,  a commission  constituting  them  a Board 
of  Corporators,  and  authorizing  them  to  open  books  of  subscrip- 
tion to  the  capital  stock  after  such  public  notice,  not  exceeding 
ten  days,  as  he  may  require  in  the  commission.  § 1881. 


SOUTH  CAROLINA. 


367 


3.  First  Meetings.  When  not  less  than  fifty  per  cent,  of 
the  proposed  capital  stock  has  been  subscribed  in  good  faith, 
the  board  of  corporators  calls  the  subscribers  together  for  the 
adoption  of  by-laws  and  election  of  a board  of  directors.  A 
majority  must  be  present  in  person  or  by  proxy.  § 1883.  The 
first  board  of  directors  is  elected  by  the  subscribers  from  their 
own  number,  and  when  so  elected  proceed  to  elect  officers  and 
call  for  payment  of  subscriptions  to  the  capital  stock.  Id. 

4.  Corporators’  Return.  Upon  payment  to  the  treasurer  or 
other  officers  designated  by  the  subscribers,  of  at  least  twenty 
per  cent,  of  the  aggregate  amount  of  the  capital  subscribed,  pay- 
able in  money,  and  also  upon  the  delivery  of  at  least  twenty  per 
cent,  of  the  property  subscribed  to  the  aggregate  amount  of  capital 
stock,  or  upon  its  delivery  being  secured  by  such  obligations  of 
the  subscribers  as  the  board  of  directors  may  approve,  the  board 
of  corporators  or  a majority  thereof  prepare  and  certify  the  cor- 
porators’ return,  which  must  include  the  facts  set  forth  in  the 
declaration  and  that  the  above  requirements  have  been  complied 
with.  It  must  also  contain  a report  of  the  first  meetings,  with 
names  of  directors  and  officers  elected.  § 1884. 

5.  Issuance  and  Filing  of  Charter.  The  corporators’  return 
is  filed  with  the  Secretary  of  State  and  on  payment  of  the  charter 
fee  and  other  prescribed  fees,  that  official  issues  a charter,  certi- 
fying that  the  corporation  has  been  fully  organized  according  to 
law,  under  the  name  and  for  the  purposes  indicated,  and  that  it 
is  authorized  to  commence  business.  A copy  of  the  charter  is 
recorded  in  the  office  of  the  register  of  mesne  conveyances  or 
clerk  of  each  county  in  which  the  corporation  shall  have  a busi- 
ness office.  § 1884. 

4.  Organization. 

(See  “Formation,”  under  § 3.) 

By-Laws.  No  special  provisions.  §§  1848,  1893. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  charter.  §1884.  Unless  lim- 
ited in  petition,  duration  is  perpetual.  §§  1891,  1893.  It  continues 
after  expiration,  annulment  or  dissolution  for  the  purpose  of  closing 
affairs.  §§  1866,  1884.  It  can  be  questioned  only  by  direct  proceed- 
ing by  the  proper  authorities  of  the  State  to  annul  the  charter.  § 1885. 

Beginning  Business.  Business  may  be  commenced  on  issuance 
of  charter  and  must  be  commenced  within  two  years  after  grant  of 
charter.  § 1884. 

Renewal.  May  be  had,  after  expiration,  on  filing  petition,  signed 
by  three  or  more  of  the  officers  or  stockholders,  setting  forth  the 
charter  and  date  of  its  expiration,  together  with  payment  of  fees  as 
for  original  charter;  whereupon  Secretary  of  State  issues  a certificate 


368 


CLASSIFIED  CORPORATION  LAWS. 


of  renewal,  perpetual  unless  limited  in  the  petition,  which  is  recorded 
as  was  original  charter.  § 1891.  Renewal  before  expiration  is  simi- 
larly provided  for  (§§  1874,  1875),  in  which  case  authorization  of  the 
petition  by  the  board  of  directors  must  be  included. 

Forfeiture  of  Charter.  Occurs  on  non-user  of  franchises  for  five 
years.  § 1898.  For  non-payment  of  taxes  for  thirty  days  Attorney 
General  may  bring  action  to  annual  charter.  §§  308,  1865.  Penalty  of 
forfeiture  of  charter  is  provided,  for  formation  of  trust.  §§2845,  2846; 
Const.,  Art.  IX,  § 13. 

Dissolution.  Surrender  of  charter  by  majority  vote  of  the  stock, 
resolution  therefor  signed  by  the  president  and  secretary  or  equivalent 
officers,  to  be  filed  in  the  office  of  the  Secretary  of  State,  is  provided 
for.  § 1884.  On  dissolution  every  domestic  corporation  is  required 
to  file  a certificate  with  the  Secretary  of  State,  signed  in  case  of  volun- 
tary dissolution  by  the  president  and  secretary  and  a majority  of  the 
directors;  if  dissolved  by  court,  signed  by  the  clerk  of  the  court.  L. 
1904,  Act  269,  § 13.  On  dissolution,  the  court  of  common  pleas  and 
circuit  judges  have  jurisdiction  to  appoint  receiver  on  application  of 
any  creditor  or  stockholder,  or  may  continue  directors  as  trustees. 

§§  1867-1873- 

6.  Corporate  Powers. 

General.  General  powers  are  enumerated.  §§  1848,  1893. 

To  Hold  Property.  This  power  is  conferred  to  the  extent  of 
property  necessary  to  the  corporate  purposes  and  such  as  is  taken 
in  payment  of  debts.  The  amount  may  be  limited  in  charter.  §§  1843, 
1848.  It  is  further  conferred  on  corporations  organized  under  the 
present  act,  to  the  same  extent  as  enjoyed  by  individuals.  § 1893. 

Its  Own  Stock.  No  statutory  provision. 

Stock  of  Other  Corporations.  Manufacturing  compa- 
nies are  expressly  authorized  to  become  members  of  any  mutual  in- 
surance or  indemnity  company.  L.  1903,  Act  40.  And  the  power  is 
fully  conferred  as  to  business  corporations.  § 1893. 

To  Borrow  Money.  This  power  is  fully  conferred  as  to  business 
corporations,  to  the  extent  of  the  legitimate  corporate  necessities. 
A vote  of  the  stockholders  is  required  for  mortgage  or  deed  of  trust 
on  property  and  franchises,  but  temporary  loans  may  be  secured  by 
officers  on  personal  property,  unless  forbidden  by  by-laws.  § 1893. 
All  fictitious  increase  of  indebtedness  is  void.  § 1855;  Const.,  Art. 
IX,  § 10. 

To  Do  Business  in  Other  States.  Is  authorized  by  implication. 
§§  304,  305- 

Consolidation  or  Merger.  No  provision  for  business  corpora- 
tions. 

Amendment  of  Charter.  May  be  had  only  to  increase  or  decrease 
capital  stock,  by  two-thirds  vote.  §§  1851,  1852;  L.  1904,  Act  248. 


SOUTH  CAROLINA. 


369 


7.  Capital  Stock. 

Amount.  Is  not  limited  by  law.  Must  be  stated  in  petition  and 
corporators’  return.  § 1880. 

Initial  Payment.  Is  to  be  at  least  twenty  per  cent,  of  the  aggre- 
gate amount  of  the  capital  subscribed  payable  in  money,  and  also 
twenty  per  cent,  of  property  subscribed,  with  at  least  fifty  per  cent, 
of  the  authorized  stock  subscribed  before  organization.  §§  1883,  1884. 
Where  the  petition  provides  for  payment  in  instalments,  fifty  per 
cent,  of  first  instalment  is  sufficient.  § 1884. 

Consideration  for  Issue.  Must  be  labor  done,  or  money  or  prop- 
erty actually  received  or  subscribed,  and  all  fictitious  increase  of  stock 
is  void.  § 1855;  Const.,  Art.  IX,  § 10.  The  initial  delivery  of  twenty 
per  cent,  of  property  subscribed  may  be  secured  by  such  obligation 
of  the  subscribers  as  the  board  of  directors  may  approve.  § 1884. 
But  property  taken  must  be  at  its  money  value,  and  any  labor  and 
property  taken  must  be  specified  with  the  value  thereof  in  the  sub- 
scription lists  and  must  be  approved  by  the  board  of  corporators. 
In  case  of  failure  to  perform  the  labor  or  deliver  the  property,  the 
money  value  thereof  is  to  be  paid  by  the  subscriber.  § 1882. 

Increase  or  Decrease.  May  be  effected  by  four  weeks’  published 
notice,  a two-thirds  vote  of  the  stock,  and  certificate  of  the  resolution 
by  the  board  of  directors,  filed  with  the  Secretary  of  State,  together 
with  the  original  charter  or  certificate  of  incorporation,  upon  which 
the  Secretary  of  State  endorses  such  increase  or  decrease,  or  issues 
a certificate,  which  is  to  be  recorded  by  the  county  officer  in  whose 
office  the  original  charter  was  recorded.  §§  1851,  1852;  L.  1904,  Act 
248.  Prior  stockholders  have  first  right  of  subscription  to  increase. 
Mfg.  Co.  v.  Gantt,  68  S.  C.  199  (1903). 

Classes  .of  Stock.  May  be  provided  for  at  the  first  meeting  of 
the  subscribers;  otherwise  by  two-thirds  vote  of  the  stock  at  a meet- 
ing duly  called  for  that  purpose  on  notice  published  four  weeks. 
§§  1856-1860,  1883. 

Par  Value  of  Shares.  Not  prescribed,  but  must  be  stated  in  peti- 
tion for  charter.  § 1880. 

Stock  Certificates.  Must  be  numbered,  and  each  stockholder 
shall  have  one  under  the  seal  of  the  corporation  signed  by  tne  secre- 
tary or  treasurer,  certifying  his  property  in  the  shares  expressed  in 
the  certificate.  § 1847;  L.  1905,  Act  436.  No  stock  shall  be  issued 
until  fully  paid  except  where  the  petition  specifies  that  it  is  to  be  paid 
for  in  instalments.  § 1894. 

Transfer  of  Stock.  Is  not  valid  until  made  on  the  books  of  the 
corporation  except  as  between  the  parties.  § 1894. 

8.  Stockholders. 

Rights  and  Powers.  They  control  increase  and  decrease  of  stock 
by  a two-thirds  vote  (§§  1851,  1852),  and  dissolution  by  a majority 
vote.  § 1884.  One-fifth  of  the  capital  stock  may  call  meeting.  § 1899. 


37o 


CLASSIFIED  CORPORATION  LAWS. 


Liability.  The  stockholders  of  an  insolvent  corporation  are  in- 
dividually liable  to  the  amount  remaining  due  to  the  corporation  on 
the  stock  owned  by  them.  Const.,  Art.  IX,  § 18. 

Meetings.  At  least  one  stockholders’  meeting  must  be  held  an- 
nually in  the  State,  at  time  and  place  and  on  such  notice  as  the  by- 
laws prescribe.  § 1846.  Annual  meeting  if  not  held  on  the  appointed 
day  may  be  called  at  any  time  thereafter.  § 1899.  Quorum  is  to  be 
fixed  by  by-laws.  § 1845.  Voting  by  proxy  is  permitted  (Id.),  form 
of  proxy  to  be  prescribed  by  by-laws.  Id.  Cumulative  voting  is 
prescribed.  §§  1846,  1883;  Const.,  Art.  IX,  § 11. 

9.  Directors. 

Number.  May  not  be  more  than  nine.  § 1883. 

Qualifications.  Directors  must  be  stockholders.  § 1883. 

Powers.  They  have  only  the  usual  powers. 

Liability.  Penal  provisions  apply  in  case  of  fraudulent  misrep- 
resentations. Crim.  Code,  §§  208,  209. 

Meetings.  Are  to  be  provided  for  by  the  by-laws.  § 1845.  A 
majority  of  the  board  is  necessary  to  exercise  its  powers  unless  other- 
wise provided.  § 1849. 

Executive  Committee.  No  provisions. 

10.  Officers. 

The  board  of  directors  are  to  elect  from  their  number  a president 
and  also  a secretary  and  treasurer,  the  latter  to  give  such  bond  as 
the  board  may  require.  §§  1844,  1883.  An  agent  must  be  maintained 
in  the  State  upon  whom  process  may  be  served.  Const.,  Art.  IX,  § 4. 

11.  Principal  Office. 

Its  location  must  be  definitely  stated  in  charter.  § 1880.  One 
public  office  with  agent  in  charge  must  be  maintained  in  State.  Const., 
Art.  IX,  §4. 

12.  Corporate  Books. 

What  Required.  Stock  transfer  book  is  mentioned.  § 1894.  Also 
stock  subscription  book.  § 1881.  No  direct  provision  as  to  where 
books  are  to  be  kept. 

Examination  of.  The  books  of  a business  corporation  are  to  be 
open  to  the  inspection  of  any  stockholder  at  any  and  all  times.  § 1897. 

13.  Reports. 

Business  corporations  operating  in  the  State  must  make  a report 
in  writing  to  the  Comptroller  General  annually  in  the  month  of 


SOUTH  CAROLINA. 


371 

February,  in  such  form  as  the  Secretary  of  State  may  prescribe,  con- 
taining: (1)  Name  of  the  company.  (2)  Location  of  principal  office. 
(3)  Name  and  post-office  address  of  president,  secretary,  treasurer, 
superintendent  and  general  manager,  and  of  each  director.  (4)  Date 
of  annual  election  of  such  officers.  (5)  Amount  of  authorized  capital 
stock  and  par  value  of  shares.  (6)  Amount  of  capital  stock  subscrib- 
ed, amount  issued  and  outstanding  and  amount  paid  up.  (7)  Nature 
and  kind  of  business  in  which  it  is  engaged,  and  place  or  places  of 
business.  (8)  Change  or  changes,  if  any,  in  above  particulars  made 
since  last  report.  L.  1904,  Act  269;  L.  1905,  Act  407. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  may 
carry  on  business  with  like  powers  as  domestic  corporations  of  same 
kind  and  class  (L.  1904,  Act  247),  by  filing  with  the  Secretary  of 
State,  within  sixty  days  after  commencing  any  business  or  acquiring 
any  property  in  the  State,  copies  of  charter  and  by-laws  with  all 
amendments  thereof,  and  a written  stipulation  in  due  form  designating 
a place  within  the  State  as  its  principal  place  of  business  or  location 
at  which  service  of  process  may  be  made  on  some  officer  or  agent 
found  therein;  also  a statement  sworn  to  by  some  officer  of  the  cor- 
poration, showing  the  residence  and  post-office  address  of  the  cor- 
poration, the  amount  of  capital  stock  actually  paid  in,  and  the  names 
of  the  president,  the  secretary  and  directors,  with  respective  . resi- 
dences and  post-office  addresses.  §§  1779-1781.  Filing  fee,  -$5  for 
each  paper.  § 1888. 

On  retiring  from  business  in  the  State  foreign  corporations  are 
required  to  file  a certificate  to  that  effect  with  the  Secretary  of  State, 
signed  by  the  president  and  secretary  of  the  corporation.  Filing  fee, 
$5.  L.  1904,  Act  269. 

Penalties  for  Non-Compliance.  Fine  of  $500  recoverable  at  the 
suit  of  the  State.  § 1783;  L.  1905,  Act  447. 

Taxation.  Annual  license  fee  of  one-half  of  one  mill  on  each 
dollar  of  the  value  of  the  property  used  within  the  State  in  the  con- 
duct of  the  corporate  business.  L.  1904,  Act  269. 

Books.  Same  regulations  as  for  domestic  corporations.  § 1790. 

Reports.  Foreign  corporations  for  profit  doing  business  in  the 
State  must  file  the  same  annual  report  in  February  as  domestic  cor- 
porations, adding  thereto:  (8)  Location  of  office  or  offices  in  South 
Carolina  and  name  and  address  of  officers  or  agents  in  charge  of  the 
corporate  business  in  the  State.  (9)  Value  of  property  owned  and 
used  in  South  Carolina  and  value  of  property  owned  and  used  outside 
of  the  State,  and  where  such  property  is  situated,  stating  county  and 
township  and  other  tax  division  where  situated  within  the  State. 
(10)  Change  or  changes,  if  any,  in  these  particulars  since  last  report. 
L.  1904,  Act  269. 

Attachments  Against.  Lie  against  foreign  corporations  as  such, 
even  after  complying  with  the  law.  Williamson  v.  Ass’n,  54  S.  C. 
582  (1898). 


372  CLASSIFIED  CORPORATION  LAWS. 

(South  Carolina) 

15.  Combinations  and  Monopolies. 

The  Constitution  of  1895,  Art.  IX,  § 13,  directs  legislation  to  pre- 
vent trusts,  combinations  or  agreements  against  public  welfare — with 
penalties  to  the  extent,  if  necessary,  of  forfeiture  of  franchises.  This 
is  carried  into  effect  by  penal  provisions,  imposing  fines  from  $100 
to  $5,000,  imprisonment  from  six  months  to  ten  years,  and  suits  to  be 
brought  by  Attorney  General  against  corporations  for  forfeiture  of 
charter  and  to  restrain  transaction  of  business.  Crim.  Code,  §§  212- 
215.  Persons  injured  may  recover  sums  paid  for  goods  controlled 
by  such  combination  or  trust.  Id.,  §214.  Civil  Code  contains  similar 
provisions.  §§  2845-2847. 


SOUTH  DAKOTA, 


1.  Corporation  Laws.* 

Constitution.  (1889.)  Special  or  exclusive  franchises  prohibited 
(Art.  Ill,  § 23);  also  the  creation  of  corporations  by  special  laws, 
except  charitable,  educational,  penal  or  reformatory  corporations 
under  control  of  the  State.  Art.  XVII,  § 1.  Cumulative  voting  pre- 
scribed. Id.,  § 5.  No  corporation  to  engage  in  business  other  than 
that  expressly  authorized  by  its  charter,  nor  to  hold  real  estate  except 
such  as  may  be  necessary  and  proper  for  its  legitimate  business.  Id., 
§ 7.  No  corporation  to  issue  stock  or  bonds  except  for  labor  done  or 
money  or  property  actually  received.  Fictitious  increase  of  stock  or 
bonds  void.  No  increase  of  stock  or  indebtedness  to  be  had  except  in 
pursuance  of  general  law,  nor  without  the  consent  of  a majority  vote 
of  the  stock,  at  meeting  on  sixty  days’  notice.  Id.,  § 8.  All  foreign 
corporations  to  have  one  or  more  known  places  of  business  in  the 
State,  and  an  authorized  agent  or  agents  in  the  same  on  whom  pro- 
cess may  be  served.  Id.,  § 6.  Monopolies  or  trusts  shall  never  be 
allowed  in  this  State.  No  incorporated  company  shall  directly  or  in- 
directly combine  or  make  any  contract  with  any  incorporated  com- 
pany, domestic  or  foreign,  to  in  any  manner  whatever  fix  the  prices, 
limit  the  production  or  regulate  the  transportation  of  any  product  or 
commodity  so  as  to  prevent  competition  in  such  prices,  production 
or  transportation  or  to  establish  excessive  prices  therefor.  Legisla- 
ture to  pass  laws  for  enforcement  thereof,  with  punishment,  if  neces- 
sary, of  forfeiture  of  franchises.  Id.,  § 20.  Competing  railroads  and 
telegraph  companies  may  not  consolidate.  Id.,  §§  11,  14. 

Statutes.  The  General  Corporation  Law  of  South  Dakota  is 
found  in  Civil  Code  (Revised  Codes,  1903),  Division  Second,  Part  3, 
Title  2,  Ch.  3.  Under  it  corporations  may  be  formed  for  any  lawful 
business.  § 40 7.  §§  396-479  contain  general  provisions;  §§  780-797 

refer  specially  to  mining,  manufacturing,  irrigation  and  other  indus- 
trial corporations;  §§  883-885  refer  to  foreign  corporations,  and  the 
intervening  sections  refer  specially  to  railroad,  telegraph  and  tele- 
phone, and  insurance  companies,  and  wagon  road,  bridge,  building 
and  loan,  banks,  cemetery,  charitable,  religious  and  educational  cor- 
porations. Amendments  are  found  in  L.  1903,  Chs.  105-107,  141  and  L. 
1905,  Chs.  73,  74- 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State  for  examining, 
filing  and  recording  articles  of  incorporation  and  issuing  charter:  On 

* References  are  to  Civil  Code,  1903,  except  where  otherwise  noted. 


373 


374 


CLASSIFIED  CORPORATION  LAWS. 


authorized  ' capital  stock  of  $25,000  or  less,  $10;  over  $25,000  but  not 
exceeding  $100,000,  $15;  over  $100,000  but  not  exceeding  $500,000,  $20; 
over  $500,000  but  not  exceeding  $1,000,000,  $25;  over  $1,000,000,  $40. 
For  any  excess  over  1,000  words  in  articles  of  incorporation,  addi- 
tional recording  fee  of  10  cents  per  folio.  Copies,  20  cents  per  folio; 
certificate  with  seal,  $1.  L.  1903,  Ch.  141. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Same  as  for  individuals.  Stock,  if  the  corporate 
property  is  assessed  in  the  State  is  not  taxed  in  hands  of  the  owner. 
Pol.  Code,  § 2058. 

General.  For  examining  and  filing  amendments  or  amended  ar- 
ticles of  incorporation,  $5.  On  increase  of  capital  stock,  such  fees  as 
will  make,  with  the  fee  paid  on  incorporation,  a total  sum  equal  to 
the  fee  which  would  be  required  on  incorporation  under  the  new  act. 
For  any  recording,  20  cents  per  folio;  same  for  transcripts.  For 
filing  bonds  or  oaths,  50  cents.  For  certificate  under  Great  Seal,  $1. 
L.  1903,  Ch.  141.  On  extension  of  corporate  existence,  same  fees  as 
on  original  incorporation.  L.  1903,  Ch.  105. 

3.  Incorporation. 

Incorporators.  For  business  corporations,  must  be  three  or  more. 
§ 407.  One-third  must  be  residents  of  the  State.  § 410. 

Articles  of  Incorporation.  Must  be  subscribed  and  acknowledged 
by  each  of  the  incorporators  (§  410),  and  must  set  forth  (§  408): 

(1)  Name  of  the  corporation.  No  restrictions. 

(2)  Purpose  for  which  formed. 

(3)  Place  where  principal  business  is  to  be  transacted. 
Must  be  within  State.  Mining  and  manufacturing  corpora- 
tions may  provide  for  office  without  the  State.  § 786. 

(4)  Term  for  which  it  is  to  exist. 

(5)  Number  of  directors  or  trustees,  with  the  names  and 
' residences  of  those  who  are  to  serve  until  the  election  of 

such  officers,  and  their  qualifications. 

(6)  If  there  is  a capital  stock,  its  amount  and  the  number 
of  shares  into  which  it  is  divided. 

Special  clauses  are  provided  for  railroad  and  wagon  road  com- 
panies. § 409.  Also  for  ditch,  flume  and  tunnel  companies.  §§  788, 
792,  793- 

Mining,  manufacturing  and  other  industrial  corporations  may 
provide  in  their  articles  of  incorporation  for  having  a business  office 
without  the  State,  at  any  place  within  the  United  States,  and  to  hold 
any  meeting  of  the  stockholders  or  directors  at  such  office,  always 
having  the  main  office  within  the  State  as  named  in  the  articles  of 
incorporation.  § 786. 


SOUTH  DAKOTA. 


375 


An  affidavit  of  two  of  the  incorporators  is  attached  to  the  articles 
of  incorporation,  stating  that  the  corporation  is  formed  in  good  faith 
and  not  for  the  purpose  of  avoiding  the  provisions  of  the  law  against 
trusts  and  monopolies.  Penal  Code,  § 781. 

Filing  and  Recording.  These  articles  are  filed  and  recorded  with 
the  Secretary  of  State  who,  if  all  fees  are  paid,  thereupon  issues  a 
certificate  over  the  Great  Seal  that  the  articles  have  been  duly  filed. 
§ 4ii. 

4.  Organization. 

First  Meetings.  No  statutory  provision  for  organization  meet- 
ing, but  by-laws  must  be  adopted  within  one  month  after  filing  ar- 
ticles of  incorporation.  This  may  be  done  without  meeting  on  writ- 
ten consent  of  two-thirds  of  the  stock.  If  meeting  be  held  it  must 
be  called  on  two  weeks’  notice  by  advertisement  in  a newspaper  pub- 
lished in  the  county  in  which  the  principal  place  of  business  is  located, 
or  if  none  there,  in  an  adjoining  county.  § 428.  Notice  may  be  waived 
if  all  stockholders  are  present  and  sign  written  consent  on  the  record. 
§ 442. 

The  directors  who  are  to  serve  until  election  are  named  in  the 
articles  of  incorporation.  § 408.  But  election  for  a new  board  must 

be  had  at  the  first  meeting  of  stockholders  at  which  by-laws  are 

adopted  or  at  such  subsequent  meeting  as  may  then  be  designated,  to 
hold  office  for  one  year.  § 432.  Immediately  after  their  election  the 

directors  must  organize  by  the  election  of  a president,  out  of  their 

number,  a secretary  and  treasurer.  § 435. 

By-Laws.  May  be  adopted  by  majority  vote  of  the  subscribed 
stock  (§  428),  or  by  written  consent  of  two-thirds  of  the  stock. 
Power  to  pass  by-laws  subject  to  control  of  the  stockholders  may  be 
delegated  to  directors  by  two-thirds  vote  of  stock.  By-laws  must  be 
certified  by  a majority  of  the  directors  and  the  secretary,  but  are  not 
then  effective  until  copied  in  book  of  by-laws.  §§  429,  430.  By-laws 
may  provide,  for:  (1)  Time,  place  and  manner  of  calling  and  con- 

ducting meetings.  (2)  Stockholders’  quorum.  (3)  Mode  of  voting 
by  proxy.  (4)  Time  of  annual  election  of  directors;  mode  and  man- 
ner of  giving  notice  thereof.  (5)  Compensation  and  duties  of  officers. 
(6)  Manner  of  election  and  tenure  of  office  of  all  officers  other  than 
directors.  (7)  Suitable  penalties  for  violation  of  by-laws,  not  ex- 
ceeding $100  for  any  one  offence.  § 429. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  of  articles  of  incorporation  with 
Secretary  of  State  and  issuance  of  certificate  by  him.  § 41 1.  Duration 
of  mining,  manufacturing  or  other  industrial  corporation  is  not  to 
exceed  twenty  years.  § 780.  Can  not  be  collaterally  attacked,  but 
only  at  the  suit  of  the  State.  § 399. 

Beginning  Business.  Business  may  be  commenced  forthwith. 
Must  be  commenced  within  one  year  under  penalty  of  forfeiture  of 


376 


CLASSIFIED  CORPORATION  LAWS. 


charter.  § 447.  Mining,  manufacturing  and  other  industrial  corpora- 
tions must  commence  business  or  construction  of  works  within  ninety- 
days  after  issuance  of  certificate  of  incorporation,  and  works  on 
ground  not  owned  by  corporation  must  be  completed  within  two 
years.  § 795. 

Renewal.  At  any  time  within  one  year  before  the  expiration  of 
the  charter  term,  the  corporate  existence  may  be  renewed  for  a period 
not  longer  than  that  allowed  for  similar  corporations  on  original 
incorporation.  Application  to  the  Secretary  of  State  therefor  must 
be  signed  by  stockholders  owning  two-thirds  of  the  capital  stock, 
with  statement  of  the  number  of  shares  owned  by  each;  also  a state- 
ment verified  by  the  president  and  secretary  must  be  filed,  setting 
forth:  (1)  Assets  and  liabilities.  (2)  Nature  of  business.  (3)  Num- 

ber of  shares  issued  and  outstanding.  (4)  Number  of  shares  sub- 
scribed and  not  issued.  (5)  Name  and  post-office  address  of  each 
stockholder  and  number  of  shares  owned  by  each.  (6)  Names  and 
post-office  addresses  of  the  directors. 

On  filing  of  these  papers  and  payment  of  same  fee  as  on  original 
incorporation,  the  Secretary  of  State,  if  satisfied  that  the  corporation 
is  solvent  and  conducting  a lawful  business,  issues  a certificate  of  the 
desired  extension.  L.  1903,  Ch.  105. 

Forfeiture  of  Charter.  If  a corporation  does  not  organize  and 
commence  the  transaction  of  business  or  the  construction  of  its 
works  within  one  year  from  the  date  of  incorporation,  its  corporate 
powers  cease.  § 447.  Ultra  vires  acts  are  grounds  for  forfeiture  at 
suit  of  the  Attorney  General.  Code  Civ.  Pro.,  § 571. 

Dissolution.  May  be  had  voluntarily,  by  application  to  the  cir- 
cuit court  of  the  county  where  the  principal  office  or  place  of  business 
is  situated,  on  resolution  of  two-thirds  of  the  stockholders,  showing 
that  all  debts  and  liabilities  have  been  paid  or  satisfied.  §§  446-450. 
Proceedings  on  involuntary  dissolution  are  provided  for  in  Code  of 
Civ.  Pro.,  §§  228,  571,  572. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 427.  No  corpora- 
tion may  engage  in  business  other  than  that  expressly  authorized  in 
its  charter.  Const.,  Art.  XVII,  § 7. 

To  Hold  Property.  No  corporation  shall  hold  or  acquire  more 
real  or  personal  property  than  is  necessary  for  its  legitimate  business. 
§ 427;  Const.,  Art.  XVII,  § 7. 

Its  Own  Stock.  A corporation  may  purchase  its  own 
stock  out  of  its  surplus  funds  when  authorized  by  resolution  of  its 
stockholders  or  by  their  unanimous  consent  in  writing,  and  may 
hold  and  transfer  the  same  in  such  manner  and  for  such  price  as 
may  be  by  them  agreed  upon.  § 425.  If  there  is  no  sufficient  bid 
at  sale  of  delinquent  stock,  the  corporation  may  purchase  and  hold 
such  shares  subject  to  the  control  of  the  remaining  stockholders.  A 
majority  of  the  remaining  shares  to  be  a majority  of  the  stock  for 
voting  purposes,  any  purchased  stock  being  non-assessable  and  non- 
dividend bearing.  §§  463,  464. 


SOUTH  DAKOTA. 


377 


Stock  of  Other  Corporations.  There  are  no  special  pro- 
visions except  prohibition  against  telegraph  companies  owning  con- 
trolling interest  in  company  with  competing  lines  (§  565;  Const.,  Art. 
XVII,  § 11),  and  the  express  provisions  for  consolidation  in  that 
manner  of  railroad  companies  (§  494)  not  owning  competing  lines. 
Const.,  Art.  XVII,  § 14. 

To  Borrow  Money.  The  corporate  indebtedness  must  be  limited 
to  the  amount  of  its  capital  stock.  §§  436,  444;  L.  1903,  Ch.  106.  No 
corporation  may  issue  bonds  except  for  labor  done,  or  money  or 
property  actually  received,  and  all  fictitious  increase  of  indebtedness 
is  void.  Indebtedness  not  to  be  increased  except  on  consent  of  a 
majority  in  value  of  the  stock  had  at  a meeting  called  on  sixty  days’ 
notice.  Const.,  Art.  XVII,  § 8. 

To  Do  Business  in  Other  States.  Mining,  manufacturing  and 
other  industrial  corporations  may  provide  in  their  articles  of  incor- 
poration for  a business  office  anywhere  within  the  United  States,  al- 
ways maintaining  their  main  office  within  the  State.  § 786. 

Consolidation  or  Merger.  There  are  no  provisions  for  consoli- 
dation of  general  corporations.  For  non-competing  railroad  corpora- 
tions detailed  provisions  are  found.  §§  494,  495. 

Amendment  of  Charter.  Amendments  may  be  made  modifying 
or  enlarging  the  corporate  business  or  purposes,  and  to  include  any 
provisions  which  might  have  been  inserted  in  the  original  articles 
(§  418),  by  vote  of  two-thirds  of  the  outstanding  stock  at  annual 
meeting,  or  at  special  meeting  called  on  thirty  days’  notice  in  writ- 
ing. Sixty  days’  notice  is  required  if  increase  of  stock  is  to  be  voted 
on.  Amended  articles,  certified  by  the  president  and  secretary  under 
the  corporate  seal,  must  be  prepared  in  duplicate,  showing  all  the 
facts  as  to  the  adoption  of  the  amendment  (vote,  number  of  shares 
outstanding,  notices  given,  etc.).  One  of  the  certificates  must  be 
preserved  by  the  secretary  of  the  corporation;  the  other  must  be 
filed  and  recorded  in  the  office  of  the  Secretary  of  State  in  the  same 
manner  as  original  articles.  Certificate  is  thereupon  issued  by  him  and 
the  amendment  is  effective.  L.  1903,  Ch.  106. 

7.  Capital  Stock. 

Amount.  Not  limited  by  law.  Must  be  stated  in  articles  of  in- 
corporation. §§  408,  424. 

Initial  Payment.  No  requirements. 

Consideration  for  Issue.  No  corporation  shall  issue  stock  or 
bonds  except  for  labor  done  or  money  or  property  actually  received; 
all  fictitious  increase  of  stock  or  bonds  to  be  void.  Const.,  Art.  XVII, 
§ 8.  Assessments  may  be  made  after  one-fourth  of  the  capital  stock 
has  been  subscribed.  Elaborate  provisions  are  made  for  manner  of 
levying  same  and  sale  of  delinquent  shares.  §§  421,  451-471. 

Increase  or  Decrease.  Of  capital  stock  is  effected  in  same  man- 
ner as  any  other  amendment  (§  419),  except  that  sixty  days’  notice  of 


373 


CLASSIFIED  CORPORATION  LAWS. 


meeting  must  be  given.  Const.,  Art.  XVII,  § 8.  The  capital  stock 
must  not  be  diminished  to  an  amount  less  than  the  indebtedness  of 
the  corporation,  or  the  cost  of  its  works.  §§  418,  419;  L.  1903,  Ch.  106. 

Classes  of  Stock.  Not  provided  for  by  statute. 

Par  Value  of  Shares.  Not  limited  but  is  to  be  stated  in  articles 
of  incorporation.  § 408. 

Stock  Certificates.  Must  be  issued  when  fully  paid  up.  Are  to 
be  signed  by  the  president  and  secretary.  May  be  issued  before  full 
payment  when  so  provided  in  the  by-laws.  § 423. 

Transfer  of  Stock.  May  be  made  by  endorsement  and  delivery, 
but  is  not  valid  except  as  between  the  parties  till  made  on  books  of  the 
company.  Entry  must  show  name  of  party,  by  and  to  whom  trans- 
ferred, number  of  shares  and  date  of  transfer.  § 423. 

8.  Stockholders. 

Rights  and  Powers.  Stockholders  control  amendments  by  a two- 
thirds  vote.  §§  419,  444;  L.  1903,  Ch.  106.  One-half  of  the  stock  may 
call  meeting  to  remove  director  or  for  special  election.  §§  438, 
440.  Two-thirds  in  interest  of  the  capital  stock  may  remove  direc- 
tors. § 438.  Corporation  may  be  dissolved  by  two-thirds  vote. 
§§  446-450.  Three  may  apply  to  justice  of  the  peace  to  call  meeting 
by  warrant.  § 440. 

Liability.  Stockholders  are  liable  for  corporate  debts  only  to 
the  extent  of  the  amount  of  unpaid  subscriptions;  action  for  recovery 
to  be  brought  jointly  or  severally,  and  court  to  determine  amount 
due  from  each  and  render  judgment  severally  for  such  amounts. 
§§  441,  783.  For  labor  claims  one  stockholder  may  be  compelled  to 
pay  the' entire  amount — if  so  much  is  due  on  his  stock— but  in  such 
case  may  enforce  contribution  by  other  stockholders.  § 783. 

Meetings.  Must  be  held  at  the  principal  office  or  place  of  busi- 
ness within  the  State  (§  440),  except  for  mining,  manufacturing  and 
other  industrial  corporations,  which  may  meet  at  an  office  outside 
the  State  if  such  office  is  provided  for  in  the  articles  of  incorporation. 
§ 786.  If  no  other  date  be  named  in  the  by-laws  for  annual  election, 
it  must  be  held  on  the  first  Tuesday  in  June.  § 431.  If  annual  meet- 
ing is  not.  held  regularly,  and  not  called  by  the  directors,  or  ad- 
journed, one-half  of  the  stock  may  call  meeting  by  publishing  two 
weeks’  notice.  §§  438,  440.  Circuit  judge  has  jurisdiction  to  hear 
complaints  as  to  irregular  elections  on  five  days’  notice  to  adverse 
party.  § 440.  Adjournments  and  their  reason  must  be  noted  on  the 
journal  of  the  board  of  directors.  § 439. 

Notice.  Two  weeks’  notice  by  publication  is  prescribed  (§  428), 
except  for  meetings  to  increase  stock  or  indebtedness,  which  require 
sixty  days’  notice.  Const.,  Art.  XVII,  § 8.  Notice  may  always  be 
waived  if  all  are  present  and  sign  consent  on  record.  § 442. 

Quorum.  A majority  is  required  for  a quorum.  § 439. 

Voting.  Must  be  by  ballot  at  elections  of  directors.  § 433. 
Each  share  has  one  vote.  Voting  by  proxy  is  permitted  as  regulated 


SOUTH  DAKOTA. 


37  9 


by  by-laws.  §§  429,  439.  Cumulative  voting  is  prescribed.  Const., 
Art.  XVII,  § 5.  Stock  must  have  stood  in  the  name  of  the  voter  on 
the  books  of  the  corporation  at  least  ten  days  prior  to  election.  § 439. 


9.  Directors. 

Number.  Must  be  not  less  than  three  nor  more  than  eleven. 
§ 434.  The  number  may  be  changed  within  these  limits  by  regular 
amendment.  §§  418,  419.  A director  may  be  removed  by  two-thirds 
vote  of  the  capital  stock.  § 438. 

Qualifications.  The  directors  must  be  stockholders  in  such 
amount  as  the  by-laws  provide.  § 434.  One-third  must  be  residents 
of  the  State.  § 404.  Compensation  may  be  fixed  by  by-laws.  § 429. 

Powers.  Power  to  make  by-laws  may  be  delegated  to  the  board, 
subject  to  repeal  or  amendment  by  stockholders.  § 430.  Unless 
otherwise  provided  by  the  by-laws,  directors  may  fill  vacancies  in 
board.  § 434.  They  are  trustees  on  dissolution  unless  other  persons 
are  appointed  by  the  court.  §§  446-450. 

Liability.  For  declaring  dividends  except  from  surplus  profits, 
for  dividing  or  withdrawing  any  part  of  the  capital  stock,  and  for 
creating  debts  beyond  the  subscribed  capital  stock,  or  reducing  or 
increasing  capital  stock  otherwise  than  as  prescribed  by  law,  the 
directors  under  whose  administration  it  happened,  except  those  absent 
or  dissenting  on  record,  are  jointly  and  severally  liable  to  the  corpora- 
tion and  to  its  creditors,  and,  in  the  event  of  dissolution,  no  statute 
of  limitation  is  a bar  to  actions  to  recover  such  amounts.  § 436. 

Any  officer  wilfully  making  certificate  or  report,  public  notice  or 
entry,  which  is  false  in  any  material  respect,  is  liable  for  any  dam- 
ages resulting.  § 437.  Loans  to  stockholders  are  prohibited  in  min- 
ing, manufacturing,  etc.,  corporations,  rendering  the  officers  assent- 
ing thereto  jointly  and  severally  liable  for  all  corporate  debts  to 
the  extent  of  such  loan.  § 781.  Neglect  or  refusal  to  make,  sign  or 
publish  annual  report  of  mining,  manufacturing,  etc.,  companies  is 
declared  a misdemeanor.  § 784.  For  any  wilful  violation  of  the  law 
resulting  in  insolvency,  directors  ordering  or  assenting  are  jointly 
and  severally  liable  for  corporate  debts  contracted  after  the  viola- 
tion. § 787. 


Meetings.  Mining,  manufacturing  and  other  industrial  corpora- 
tions, maintaining  an  office  in  the  State,  and,  by  charter  provision,  an 
office  without  the  State,  and  railroad  companies  maintaining  a resi- 
dent agent,  may  hold  directors’  meetings  at  the  company  office  either 
within  or  without  the  State.  Other  corporations  must  hold  directors’ 
meetings  at  the  principal  office  or  place  of  business  within  the  State. 
§§  440,  786.  Notice  and  manner  of  conducting  meetings  may  be 
governed  by  the  by-laws  (§  429),  but  a quorum  may  be  constituted 
only  by  a majority.  §§  434,  435. 

Executive  Committee.  Not  expressly  provided  for,  but  is  ob- 
viously within  the  scope  of  the  by-laws.  § 429. 


380 


CLASSIFIED  CORPORATION  LAWS. 


10.  Officers. 

A president,  who  must  be  a director,  a secretary  and  a treasurer 
are  prescribed,  their  duties  and  compensation  to  be  fixed  by  the  by- 
laws. §§  429,  435.  The  treasurer  of  any  mining,  manufacturing  or 
other  industrial  corporation  must,  on  demand  of  holders  of  twenty 
per  cent,  of  the  stock,  make  a statement  of  the  assets  and  liabilities 
of  the  corporation,  but  shall  not  be  required  to  make  such  statement 
oftener  than  once  in  six  months.  § 785.  Statement  must  be  furnished 
within  twenty  days  of  demand  under  penalty  of  $50  and  $10  for  each 
day  of  delay.  Id. 


11.  Principal  Office. 

An  office,  designated  in  the  articles  of  incorporation,  must  be 
maintained  in  the  State.  § 408.  It  may  be  changed  only  by  regular 
amendment.  §§  418,  419;  L.  1903,  Ch.  106.  Mining,  manufacturing 
and  other  industrial  corporations  may  provide  in  their  articles  of  in- 
corporation for  a business  office  anywhere  in  the  United  States,  but 
must  always  maintain  a principal  office  within  the  State.  § 786. 


12.  Corporate  Books. 

What  Required.  All  corporations  for  profit  are  required  to  keep 
a record  of  their  business  transactions,  and  a journal  of  directors’  and 
stockholders’  meetings,  showing  whether  regular  or  special,  the  time, 
place  and  notice  and  by  what  authority  held;  also  showing  every  act 
done,  or  ordered  to  be  done,  those  present  and  absent,  and,  on  request, 
the  time  of  entrance  or  exit  of  any  person,  the  ayes  and  noes,  and 
any  protest  against  any  action  or.  proposed  action.  Also  a “Stock 
and  Transfer  Book”  must  be  kept  showing  the  names  of  stockholders 
alphabetically  arranged,  instalments  paid  or  unpaid,  assessments 
levied  and  paid  or  unpaid,  all  transfers  or  alienations  of  shares  with 
date  and  parties  by  and  to  whom,  and  such  other  entries  as  the  by- 
laws may  prescribe.  §§  423,  445.  Also  a “Book  of  By-Laws”  must 
be  kept.  § 430.  Books  of  accounts  ar,e  prescribed  for  mining  and 
other  companies.  § 782. 

Where  Kept.  Book  of  by-laws  must  be  kept  at  principal  office 
within  the  State.  § 430.  No  provision  as  to  other  books. 

Examination  of.  Book  of  by-laws  is  to  be  open  to  inspection  of 
the  public  during  office  hours.  § 430.  The  other  books  to  be  open 
to  inspection  of  any  director,  stockholder,  member  or  creditor.  § 445; 
Penal  Code,  § 683.  Account  books  of  mining,  manufacturing  and  other 
industrial  corporations  must  be  at  all  reasonable  times  open  to  in- 
spection of  any  of  the  stockholders,  and  as  often  as  once  a year  a 
financial  statement  must  be  laid  before  the  stockholders.  § 782.  Such 
statement,  or  one  of  any  particular  account,  may  be  required  from 
the  treasurer  by  twenty  per  cent,  of  the  stock  as  often  as  every  six 
months.  § 785. 


SOUTH  DAKOTA. 


38l 


13.  Reports. 

Mining,  manufacturing  and  other  industrial  corporations  must 
annually,  within  twenty  days  from  January  1st,  make  a report,  in  a 
newspaper  published  nearest  to  the  place  of  business,  stating  the 
capital  stock,  amount  actually  paid  in,  amount  and  nature  of  its  in- 
debtedness, and  amounts  due  the  corporation,  number  and  amount  of 
dividends,  and  when  paid,  and  net  amount  of  profits.  This  report 
must  be  signed  by  the  president  and  a majority  of  the  directors,  be 
verified  by  the  president  and  secretary,  and  filed  in  the  office  of  the 
Register  of  Deeds  of  the  county  in  which  the  corporate  business  is 
carried  on.  § 784.  Neglect  to  publish  and  file  this  report  is  a misde- 
meanor. Id. 

Publication  is  required  of  annual  reports  of  mining,  manufac- 
turing and  other  industrial  corporations.  § 784.  Publication  of 
notices  of  meetings  may  be  dispensed  with  by  waiver  or  written 
assents.  Notice  of  dissolution  and  of  sale  of  stock  for  non-payment 
of  assessments  must  always  be  published.  §§  446,  456,  459. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  foreign  corporation  shall 
transact  any  business  in  the  State  or  acquire  any  property  therein,  or 
sue  or  maintain  any  action,  until  it  shall  have  filed  and  recorded  in 
the  office  of  the  Secretary  of  State  a duly  authenticated  copy  of  its 
charter  or  articles  of  incorporation,  and  appointed  an  agent,  resid- 
ing at  some  accessible  point  in  the  State,  duly  authorized  to  accept 
service  of  process;  a duly  authenticated  copy  of  the  appointment  of 
such  agent  to  be  also  filed  and  recorded  in  the  office  of  the  Secretary 
of  State  and  of  the  Register  of  Deeds  of  the  county  in  which  the 
agent  resides.  §§  883-885.  Fees,  $10;  appointment  of  agent  and  cer- 
tificate, $2;  annual  statement,  $5.  L.  1903,  Ch.  141. 

The  Constitution  provides  that  foreign  corporations  doing  busi- 
ness in  the  State  must  maintain  one  dr  more  known  places  of  busi- 
ness in  the  State.  Art.  XVII,  § 6. 

Penalties  for  Non-Compliance.  Inability  to  maintain  actions  in 
the  courts  of  the  State  on  any  contract  or  transaction  had  in  the 
State,  and  liability  of  officers  and  agents  as  for  a misdemeanor.  § 885. 

Taxation.  As  for  domestic  corporations.  Pol.  Code,  §§  2114, 
2124. 

Books.  Foreign  corporations  are  subject  to  the  same  penal 
statutes  governing  domestic  corporations  in  relation  to  books  and  all 
corporate  acts.  Penal  Code,  §§  670-691,  690. 

Reports.  Tax  returns  are  to  be  made  as  by  domestic  corpora- 
tions. §§  593,  594;  Pol.  Code,  §§  2114,  2124. 

Attachments  Against.  Attachment  lies  against  foreign  corpora- 
tions which  have  not  complied  with  the  law  by  appointment  of  an 
agent  on  whom  process  may  be  served.  This  is  solely  because  of 
their  failure  to  comply  with  the  law.  Code  Civ.  Pro.,  §§  205,  207. 


382 


CLASSIFIED  CORPORATION  LAWS. 


(South  Dakota) 


15.  Combinations  and  Monopolies. 

The  restrictions  on  trusts  and  monopolies  contained  in  the  Con- 
stitution (See  under  § 1,  “Contsitution”)  are  carried  out  in  elaborate 
penal  provisions  (Penal  Code,  §§  770-781),  declaring  violations  misde- 
meanor, punishable  by  fines;  first  offence,  $1,000  to  $5,000;  second 
offence,  $5,000  to  $10,000,  one-half  to  the  person  aggrieved  and  one- 
half  to  the  County  Treasurer  in  county  where  conviction  may  be 
had.  §§  773,  774.  An  act  of  1890  (§§  776-779)  seems  aimed  more 
especially  against  exclusive  agencies  or  combinations  for  sale  of  farm 
machinery  and  implements,  declaring  offences  felony,  punishable  by 
fine  not  exceeding  $1,000  and  imprisonment  not  exceeding  three  years, 
or  both.  § 776.  Injunction  lies  against  any  business  in  violation  of 
the  law.  § 778. 


TENNESSEE. 


1.  Corporation  Laws.* 

Constitution.  (1870.)  Perpetuities  and  monopolies  are  contrary 
to  the  genius  of  a free  state  and  shall  not  be  allowed.  Art.  I,  § 22. 
No  corporation  to  be  created  except  by  general  law.  Art.  XI,  § 8. 
Manufactured  produce  of  the  State  not  to  be  taxed.  Art.  II,  § 30. 

Statutes.  The  Corporation  Law  of  Tennessee  is  found  in  Part  I, 
Title  9,  Ch.  3,  of  Code  of  Tennessee,  1896  (Shannon),  the  greater  part 
of  which  consists  of  provisions  for  special  corporations.  General  pro- 
visions are  found  in  §§  2024-2076;  §§  2330-2353  refer  specially  to  min- 
ing and  manufacturing  companies,  and  Ch.  4 provides  for  foreign  cor- 
porations. 

Under  the  provisions  of  the  law,  corporations  may  be  formed  for 
any  lawful  business,  or  to  promote  or  conduct  any  legitimate  object 
or  purpose  for  individual  profit.  L.  1903,  Ch.  474. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  One-tenth  of  one 
per  cent,  on  authorized  capital  stock  (L.  1899,  Ch.  432)  and  filing  fee 
of  $10  including  cost  of  recording.  § 720;  L.  1899,  Ch.  2.  Certified 
copy,  $10.  Id. 

To  Register  of  Deeds,  $3.  § 2039. 

Franchise  Tax.  Some  83  occupations  are  declared  to  be  “privi- 
leged” and  a license  tax  imposed,  graded  according  to  capital,  busi- 
ness done  or  population  of  the  county  where  they  operate.  §§  712-717. 

Local  Taxation.  Manufactured  produce  of  the  State  is  not  taxed. 
Const.,  Art.  II,  § 30;  L.  1901,  Ch.  174.  Stock  of  corporations,  all  the 
property  of  which  is  taxable  to  the  corporation,  is  not  assessed  to  the 
shareholder.  § 799.  Franchises  are  included  in  assessment  of  prop- 
erty. §§  774,  800;  L.  1901,  Ch.  174.  (See  § 13,  “Reports.”) 

General.  For  registering  any  amendment,  $3.  § 2032.  Agree- 

ments of  consolidation,  $25.  Other  agreements,  $25.  L.  1899,  Ch.  2. 
On  increase  of  capital  stock  by  amendment  to  the  charter  and  on  con- 
solidation or  merger,  privilege  tax  of  one-tenth  of  one  per  cent,  on  in- 
crease, or  on  outstanding  stock  of  acquired  corporation,  must  be  paid 
to  the  Secretary  of  State.  L.  1899,  Ch.  432,  pp.  1049,  1050;  L.  1903, 
Ch.  398. 

* Sections  given  are  of  Shannon’s  Code  of  Tennessee,  1896. 

383 


384 


CLASSIFIED  CORPORATION  LAWS. 


3.  Incorporation. 

Incorporators.  Must  be  five  or  more  persons  over  twenty-one 
years  of  age.  No  requirements  as  to  residence,  except  for  railroads 
and  certain  other  special  incorporations.  § 2025;  L.  1903,  Ch.  474. 

Charter  of  Corporation.  Form  is  set  out  at  length  in  the  Statute. 
It  is  to  be  signed  by  the  incorporators  and  acknowledged,  or  any  one 
or  more  signatures  proved  by  a witness  before  the  clerk  of  the  county 
court.  Acknowledgments  before  notaries  public  have  been  ratified 
from  time  to  time  by  acts  of  legislature  (§  2542;  L.  1890,  Ch.  17;  L. 
1903,  Ch.  302),  but  these  acts  have  not  authorized  such  acknowledg- 
ments for  the  future.  Charter  is  to  set  forth: 

(1)  Names  of  incorporators. 

(2)  Name  of  corporation. 

(3)  Purposes  of  corporation  stated  specifically. 

(4)  Amount  of  capital  stock,  and  further  nearly  all  the 
essential  features  of  a general  corporation  law,  enumerating 
the  usual  powers;  the  scope  of  by-laws;  number,  powers  and 
proceedings  of  board  of  directors;  corporate  books;  assess- 
ments on  stock;  amendments  and  dissolution;  annual  reports; 
liability  of  officers,  directors  and  stockholders;  concluding 
with  an  application  for  such  charter  “for  the  purposes  and 
with  the  powers,  etc.,  declared  by  the  foregoing  instrument.” 
L.  1903,  Ch.  474. 

Filing  and  Recording.  Charter  with  attached  application  or  peti- 
tion is  registered  with  the  Secretary  of  State,  who  issues  certificate  of 
registration;  and  it  is  also  registered  in  the  office  of  the  Register  of 
the  county  in  which  principal  office  is  established,  together  with  the 
certificate  of  the  Secretary  of  State  under  the  Great  Seal  of  the  State. 

§ 2026.  If  agencies  are  established  in  other  counties,  the  papers  must 
also  be  registered  there.  § 2027.  The  Secretary  of  State  publishes  in 
each  volume  of  Session  Laws  a list  of  all  corporations  organized  un- 
der this  law.  § 2033. 

4.  Organization. 

First  Meetings.  No  statutory  provisions  as  to  first  meeting  of 
stockholders.  The  first  board  of  directors  consists  of  the  incorpora- 
tors. L.  1903,  Ch.  474. 

By-Laws.  Cover  the  usual  details  of  corporate  procedure  and  • 
may  also  regulate  the  subscriptions  for  and  transfers  of  stock,  fix 
amount  of  capital  stock  to  be  invested  in  enterprise,  the  division  of 
same  into  shares,  time  required  for  payment  of  subscriptions,  and 
amount  to  be  called  for  at  any  one  time.  L.  1903,  Ch.  474. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  registration  in  the  county  of  the  princi- 
pal office,  of  charter  certified  by  the  Secretary  of  State  under  the 


TENNESSEE. 


385 


Great  Seal.  § 2026.  It  may  be  perpetual,  and  its  duration  is  not 
required  to  be  stated  in  the  charter.  Extends  five  years  beyond  dis- 
solution, to  wind  up  affairs.  §§  2071,  2074.  Cannot  be  collaterally 
questioned.  §§  2026,  2063,  2064. 

Beginning  Business.  May  be  commenced  on  completion  of  reg- 
istration requirements.  §§  2026,  2027. 

Renewal.  No  provisions  for  renewal,  the  statutes  contemplating 
perpetual  existence.  Corporations  formed  by  charter  of  the  chancery 
court,  may  extend  their  existence  and  come  under  the  general  law  by 
proceedings  as  on  original  incorporation.  §§  2030,  2031.  Reorganiza- 
tion by  purchasers  under  judicial  sale  of  corporate  franchises  and 
property  is  provided  for.  §§  2049-2051. 

Forfeiture  of  Charter.  Does  not  occur  for  non-user.  §§  2042, 
2070.  But  violations  of  certain  provisions  as  to  consolidation  (§§  2047, 
2048)  and  mismanagement,  in  the  particulars  usually  entailing  per- 
sonal liability  of  directors,  entail  forfeiture,  as  a preliminary  to  en- 
forcing such  liability.  §§  2067-2069.  For  violations  of  laws  against 
combinations  and  monopolies.  §§  3188,  6625.  Proceedings  by  State 
are  provided  for  misuse,  non-user  or  abuse  of  powers.  §§  5165,  5181, 
et  seq. 

Dissolution.  May  be  effected  by  application  to  courts  of  compe- 
tent jurisdiction.  §§  2070-2075.  Occurs  on  rejection  of  a fundamental 
amendment  to  charter  by  more  than  one-half  of  the  stock.  L.  1903, 
Ch.  474,  P-  1315. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  § 2054.  Banking 
powers  prohibited.  § 2059.  Business  outside  the  purpose  of  the 
charter  must  not  be  undertaken.  Id. 

To  Hold  Property.  This  power  is  granted  to  the  extent  of  cor- 
porate purposes,  and  as  to  property  taken  on  payment  of  debts.  §§ 
2054,  2346,  2347. 

Its  Own  Stock.  No  general  provisions.  Is  prohibited 
to  banks,  with  specified  exceptions.  § 3235. 

Stock  of  Other  Corporations.  No  general  provisions. 
On  vote  of  three-fourths  of  their  stock,  mining  companies  may  acquire 
stock  and  bonds  of  railroads  useful  to  their  mining  operations.  §§ 
2339,  2340. 

To  Borrow  Money.  This  power  is  granted  in  general  terms.  § 
2054.  A majority  vote  of  the  issued  stock  is  required  for  the  purpose 
of  issuing  bonds  and  mortgaging  property  and  franchises.  § 2049. 
So  also  for  mining  companies.  § 2341.  But  the  corporate  indebted- 
ness must  at  no  time  exceed  the  capital  stock  paid  in.  §§  2337,  2350;  L. 
1903,  Ch.  474. 

To  Do  Business  in  Other  States.  No  statutory  provision. 

Consolidation  or  Merger.  Is  permitted,  except  between  railroads 
owning  competing  lines  (§  2046a)  and  for  certain  semi-public  cor- 


386 


CLASSIFIED  CORPORATION  LAWS. 


porations  (§  2047),  by  majority  vote  of  the  stock,  at  a meeting  called 
on  sixty  days’  notice.  §§  2044-2048. 

Amendment  of  Charter.  Charters  of  corporations  formed  under 
the  general  laws  may  be  amended  only  by  act  of  legislature.  If  any 
such  amendment  is  fundamental  in  character,  rejection  by  more  than 
one-half  the  stock  dissolves  the  corporation  and  it  exists  thereafter 
only  for  the  purpose  of  winding  up  business.  If  fundamental  amend- 
ments are  accepted  dissenting  stockholders  may  withdraw  and  re- 
ceive par  value  of  their  shares  if  worth  so  much,  if  not  then  the  market 
value.  L.  1903,  Ch.  474,  p.  1315.  Special  provisions  apply  to  corpora- 
tions chartered  by  special  act,  or  by  chancery  court.  §§  2028-2031, 
2344- 

7.  Capital  Stock. 

Amount.  Is  not  limited  by  law.  Must  be  stated  in  charter.  L. 
1903,  Ch.  474. 

Initial  Payment.  Is  not  prescribed  by  law. 

Consideration  for  Issue.  Nothing  but  cash  or  land  at  a fair  cash 
valuation  shall  be  taken  in  payment  of  any  part  of  the  capital  stock 
(§  2335),  except  patents,  which  may  be  taken  at  a valuation  agreed  on 
by  the  subscriber  and  the  corporation.  § 2351:  L.  1903,  Ch.  474.  As- 
sessments to  be  regulated  entirely  by  by-laws.  § 2055.  Preferred 
stock  can  be  issued  only  at  par  and  for  cash.  L.  1905,  Ch.  174. 

Increase  or  Decrease.  May  be  accomplished  by  regular  amend- 
ment. § 2028;  L.  1899,  pp.  1049,  1050. 

Classes  of  Stock.  May  be  provided  for  in  charter;  amount  of 
common  and  preferred  must  be  stated,  and  the  latter  must  in  no  case 
exceed  two-thirds  of  the  total  authorized  capital  stock.  Preferred 
stock  must  be  paid  for  in  cash  at  par;  may  be  made  redeemable  at  not 
less  than  par;  dividends  may  be  made  cumulative,  but  must  not  ex- 
ceed 10  per  cent,  per  annum.  Preferred  stockholders  are  not  liable 
for  corporate  debts,  unless  their  stock  has  voting  power,  which  may 
be  conferred  by  two-thirds  vote  of  the  common  stock.  Issue  of  pre- 
ferred stock  may  also  be  provided  for  by  the  same  vote.  L.  1905,  Ch. 

174. 

Par  Value  of  Shares.  May  be  $100  or  less.  § 2052.  Stock  issued 
in  shares  of  $25  may  be  called  in  and  $100  shares  issued  for  every  four 
of  the  original  shares.  § 2053. 

Stock  Certificates.  If  preferred  stock  be  issued,  certificates  must 
show  on  their  face  plainly  written  or  printed  the  words  “Common 
Stock”  or  “Preferred  Stock.”  L.  1905,  Ch.  174. 

Transfer  of  Stock.  Must  be  made  on  the  books  of  the  company. 
§ 2066.  Manner  to  be  regulated  by  by-laws.  § 2055.  Does  not  re- 
lieve original  holder  from  liability  on  unpaid  stock  until  transferee 
has  paid  up  all  balance  due.  § 2058. 


TENNESSEE. 


387 


8.  Stockholders. 

Rights  and  Powers.  Stockholders  control  amendments  by  a ma- 
jority vote  (§§  2028,  2045,  2344);  also  conveyance  or  mortgage  of  cor- 
porate property  and  franchises.  §§  2045,  2049.  Three-fourths  may 
also  change  number  of  directors  (§  2038)  and  fix  meetings.  § 2342. 

Liability.  The  amount  due  on  any  unpaid  stock  from  a sub- 
scriber to  the  corporation  shall  be  a fund  for  the  payment  of  cor- 
porate debt.  § 2058.  Also  for  all  claims  of  employees  in  case  of  in- 
solvency of  the  corporation.  § 2337;  L.  1903,  Ch,  474. 

Meetings.  Time  and  place  of  meetings  of  mining  or  manufactur- 
ing companies  may  be  fixed  by  three-fourths  vote  of  the  stock.  § 2342. 
No  provisions  as  to  notice  or  permitting  meetings  to  be  held  without 
the  State.  Quorum  is  a majority.  Voting  at  elections  may  be  by 
proxy.  Each  share  of  stock  has  one  vote.  § 2056. 


9.  Directors. 

Number.  Must  be  not  less  than  five.  § 2056.  The  number  may 
be  changed  by  three-fourths  vote  of  the  stock.  § 2038. 

Qualifications.  They  must  be  stockholders.  The  first  board  is 
composed  of  the  incorporators.  § 2056;  L.  1903,  Ch.  474.  Two-thirds 
only  of  the  directors  of  a banking  corporation  may  be  stockholders. 
§ 3233- 

Powers.  Are  enumerated  in  charter.  May  fill  vacancies  on  the 
board.  § 2056.  Make  application  for  amendments.  L.  1903,  Ch.  474. 

Meetings.  No  provisions  except  that  a majority  shall  constitute 
a quorum.  § 2056.  Stockholders  of  mining  or  manufacturing  com- 
panies are  to  fix  time  and  place  for  directors’  meetings,  by  a three- 
fourths  vote.  § 2342. 

Liability.  Directors  of  mining  or  manufacturing  companies  are 
liable  for  loans  to  stockholders  (§  2349),  or  for  use  of  funds  not  au- 
thorized by  charter;  payments  of  dividends  when  funds  are  insufficient 
to  meet  liabilities;  keeping  false  books  or  accounts  to  any  person’s  in- 
jury; and  for  false  reports.  For  these  offenses  they  are  liable  as  for 
misdemeanor,  and  in  damages  to  those  injured.  §§  2067,  2068,  2338. 
For  permitting  corporate  debts  to  exceed  the  paid  in  capital,  they  are 
individually  liable  for  the  excess.  §§  2337,  2350.  A dissenting  director 
entering  his  objection  in  writing  is  exempt.  § 2338;  L.  1903,  Ch.  474. 

Executive  Committee.  Not  provided  for  by  statute. 

10.  Officers. 


A president,  secretary  and  treasurer  are  prescribed,  and  such 
other  officers  as  may  be  necessary,  their  duties,  qualifications  and 
compensation  to  be  regulated  by  by-laws.  §§  2051,  2054.  They  are 
not  to  hold  office  more  than  two  years.  § 2055. 


388 


CLASSIFIED  CORPORATION  LAWS. 


11.  Principal  Office. 

Without  any  direct  provisions  on  the  subject,  it  is  obvious  that 
the  statutes  contemplate  the  maintenance  of  principal  office  within  the 
State.  §§  2026,  2027. 

12.  Corporate  Books. 

What  Required.  The  directors  are  to  keep  full  and  true  records 
of  their  proceedings  with  an  annual  statement  of  receipts  and  dis- 
bursements incorporated  therein.  § 2056.  A stock  and  transfer  book 
are  also  mentioned  (§  2066),  to  show  original  and  subsequent  stock- 
holders; their  respective  interests;  amount  paid  on  shares;  transfers 
of  stock,  by  and  to  whom  made;  also  other  transactions  in  which 
stockholders  or  creditors  may  have  an  interest  § 2057;  L.  1903,  Ch. 
474- 


Where  Kept.  No  provision. 

Examination  of.  The  books  required  by  statute  are  to  be  open 
to  inspection  of  stockholders  and  creditors.  §§  2056,  2057. 

13.  Reports. 

Every  corporation  must  annually  in  the  month  of  January  pub- 
lish a statement  sworn  to  by  its  president  and  two  of  the  directors, 
in  or  near  the  county  of  its  principal  office,  showing  amount  of  capi- 
tal stock,  existing  liabilities  and  a list  of  the  stockholders.  §§  2334, 
2348;  L.  1903,  Ch.  474.  Detailed  tax  returns  are  to  be  made  to  as- 
sessors. L.  1891,  Ch.  174,  pp.  322,  324. 

Publication  of  notice  of  meeting  for  consolidation,  etc.,  is  required 
in  Memphis,  Knoxville  or  Nashville  daily  newspaper  for  sixty  days. 
§ 2045. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation  de- 
siring to  own  property  or  carry  on  business  in  the  State  must  file  in 
the  office  of  the  Secretary  of  State  an  authenticated  copy  of  its  char- 
ter and  an  abstract  thereof  in  the  office  of  the  Register  of  each  county 
in  which  it  proposes  to  carry  on  business  or  own  land.  § 2546. 

Fees  for  filing  charter,  $20;  for  certified  copy,  $20;  for  abstract  of 
same,  $20.  L.  1899,  Ch.  2. 

Penalties  for  Non-Compliance.  Fines  against  offenders  of  from 
$100  to  $500  in  discretion  of  jury  trying  the  case.  § 2547.  Contracts 
are  not  enforced  by  the  courts.  Harris  v.  Co.,  108  Tenn.  245. 

Taxation.  Privilege  tax  on  foreign  corporations  whose  main 
business  is  transacted  outside  of  Tennessee,  are  as  follows:  On  capi- 
tal of  $100,000  and  less,  $50;  over  $100,000  and  not  more  than  $250,000, 
$100;  over  $250,000  and  not  more  than  $500,000,  $150;  over  $500,000 
and  not  more  than  $1,000,000,  $200;  over  $1,000,000,  $250.  On  cor- 


TENNESSEE. 


389 


porations  operating  mainly  in  Tennessee,  one-tenth  of  one  per  cent, 
on  authorized  capital.  L.  1903,  Ch.  239.  Local  taxation,  same  as 
of  domestic  corporations,  with  same  exemptions.  §§  2553,  2560,  2561; 
L.  1901,  Ch.  174. 

Books  and  Reports.  Foreign  corporations  complying  with  the 
law  become  for  all  purposes  domestic  corporations.  § 2548.  Tax 
returns,  same  as  of  domestic  corporations.  L.  1901,  Ch.  174,  pp.  322, 

324. 

Attachments  Against.  In  county  where  agent  is  not  maintained, 
property  may  be  attached  on  the  sole  ground  that  defendant  is 
a foreign  corporation,  even  though  it  has  otherwise  complied  with  the 
law.  § 2549.  Resident  creditors  are  preferred.  §2550. 

15.  Combinations  and  Monopolies. 

Are  provided  against  by  civil  and  penal  laws.  §§  3185-3191,  6622- 
6625;  Const.,  Art.  I,  § 22.  Any  such  agreements  are  declared  void 
(§§  3185,  6624);  officers,  agents  or  stockholders  guilty  of  violations 
are  deemed  guilty  of  felony  and  punished  by  fine  of  from  $500  to  $5,- 
000  and  imprisonment  from  one  to  five  years  §§  3186,  6623.  Joint 
and  several  liability  of  all  persons  and  corporations  concerned  is  pro- 
vided. § 3187.  Charter  is  also  forfeited  (§§  3188,  6625),  and  persons 
injured  may  recover  double  damages.  § 3190  Violation  of  statute 
may  be  pleaded  in  bar  to  any  suit  by  the  corporation.  § 3189. 


TEXAS. 


1.  Corporation  Laws.* 

Constitution.  (1876.)  Perpetuities  and  monopolies  shall  never 
be  allowed.  Art.  I,  § 26.  Public  ownership  or  interest  in  private 
corporations  prohibited.  Art.  Ill,  §50;  Art.  XI,  §3.  Private  cor- 
porations may  be  created  only  by  general  laws.  Art.  XII,  §§  1,  2. 
No  corporation  shall  issue  stock  or  bonds  except  for  labor  done  or 
money  or  property  actually  received  and  all  fictitious  increase  of  stock 
or  indebtedness  is  void.  Id.,  § 6.  Every  corporation  must  maintain 
an  office  in  the  State  where  transfers  of  stock  must  be  made  and 
books  shall  be  kept  with  prescribed  details,  for  inspection  of  stock- 
holders. Art.  X,  §3.  (See  §12,  “Corporate  Books.”)  Attorney 
General  to  inquire  into  charter  rights  of  all  private  corporations  and 
take  proper  action  to  enjoin  misuse,  or  to  seek  judicial  forfeiture  of 
charter.  Art.  IV,  § 22. 

Statutes.  The  corporation  laws  of  Texas  are  found  in  the  Civil 
Statutes  of  1900  (Sayles),  Title  21,  with  acts  amendatory  thereof  in 
the  Laws  of  1901,  1903  and  1905.  Chapters  1-5  and  18  contain  general 
provisions,  Chapter  17  refers  to  foreign  corporations,  and  the  inter- 
vening chapters  treat  specially  of  road,  telegraph,  canal,  gas  and 
water,  religious,  charitable,  cemetery,  bridge  and  ferry,  surety,  bond 
investment  and  other  corporations.  Carriers,  express  companies,  in- 
surance, mines  and  mining,  and  railroads  also  have  special  titles. 

The  objects  for  which  corporations  may  be  formed  under  the 
general  law  are  enumerated  and  cover  practically  every  form  of  law- 
ful business.  § 642. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  On  filing  the 

charter,  $25  on  authorized  capital  stock  up  to  $10,000,  and  an  addi- 
tional fee  of  $5  for  each  additional  $10,000  or  fraction  thereof.  L. 
1905,  Ch.  91.  For  copying,  15  cents  per  folio;  for  each  official  certifi- 
cate, $1.  § 2439.  Also  proportional  part  of  one  year’s  franchise  tax 

to  May  1st  next  succeeding  must  be  paid.  § 5243k 

Franchise  Tax.  An  annual  franchise  tax  must  be  paid  on  stock 
issued  and  outstanding,  as  follows:  $1  on  each  $2,000  or  fraction 

thereof  of  capital  stock  up  to  $100,000;  $1  thereafter  on  each  $10,000 
or  fraction  of  excess  to  $1,000,000;  and  $1  on  each  $20,000  or  part 
thereof  in  excess  of  $1,000,000  up  to  $10,000,000,  and  $1  on  each  $50,000 
or  fractional  part  thereof  in  excess  of  $10,000,000.  Minimum  tax,  $10. 
§ 5243i;  L.  1905,  Ch.  19.  Franchise  tax  payable  on  May  1st.  §52431. 

* References,  except  as  otherwise  noted,  are  to  the  Civil  Statutes ' of  Texas 
(Sayles,  1900). 


390 


TEXAS. 


391 


Local  Taxation.  Returns  are  to  be  sworn  to  by  the  secretary  or 
equivalent  officer.  § 5084.  Capital  stock  of  domestic  corporations  is 
not  taxed  to  the  owners,  but  returns  must  be  made  of  stock  of  foreign 
corporations.  §§  5076,  5077.  Tax  returns  to  be  made  between  Janu- 
ary 1st  and  June  1st,  as  required  by  the  Assessor,  of  property  held 
on  January  1st.  § 5066.  A tax  on  gross  receipts  is  imposed  on  a 
great  number  of  industries  by  L.  1905,  Chs.  148,  154. 

General.  Recording  fee  to  Secretary  of  State  is  15  cents  per 
folio.  Certifying  charter,  $1.  § 2437;  L.  1905,  Ch.  91.  Same  for 

copies.  Id.  For  amendments,  same  fees  as  on  incorporation.  Id. 

3.  Incorporation. 

Incorporators.  Must  be  three  or  more.  § 641.  At  least  two  must 
be  residents  of  the  State.  § 644.  Married  women  may  be  incorpora- 
tors. Id.  Corporations  may  be  incorporators.  § 642,  subdiv.  49. 

Charter.  Must  be  subscribed  and  acknowledged  by  each  of  the 
incorporators,  and  must  set  forth  (§  643) : 

(1)  Name  of  the  corporation.  Name  similar  to  that  of 
another  corporation  is  not  allowed. 

(2)  Purpose  for  which  it  is  formed.  Plurality  of  purposes 
permitted.  §642;  L.  1901,  Ch.  43,  §39. 

(3)  Place  or  places  where  business  is  to  be  transacted. 

(4)  Term  for  which  it  is  to  exist.  May  extend  fifty  years. 
If  not  stated  in  charter,  term  is  limited  to  twenty  years.  § 651. 

(5)  Number  of  directors  or  trustees  and  names  and  resi- 
dences of  the  appointees  for  the  first  year. 

(6)  Amount  of  capital  stock,  if  any,  and  number  of  shares 
into  which  it  is  divided.  No  limitations. 

Special  charter  clauses  are  provided  for  bridge  and  road  com- 
panies. An  affidavit  must  be  attached  to  the  charter  showing  that  at 
least  fifty  per  cent,  of  the  authorized  capital  stock  has  been  subscribed 
for  and  ten  per  cent,  paid  in,  or  in  lieu  of  these  requirements  that  at 
least  $100,000  of  the  capital  stock  has  been  subscribed  and  paid  for 
in  cash.  § 642,  subdiv.  56;  L.  1901,  Ch.  15. 

Filing  and  Recording.  The  charter  with  affidavit  attached  and 
accompanied  by  the  proper  fees  is  filed  and  recorded  in  the  office  of 
the  Secretary  of  State,  who  thereupon  issues  a certified  copy  of  the 
charter  which  is  competent  evidence  of  the  corporate  existence.  § 645. 

4.  Organization. 

First  Meetings.  No  special  provisions.  Meetings  of  stockholders 
must  be  held  within  the  State.  § 673. 

By-Laws.  May  be  adopted  by  the  stockholders  for  the  manage- 
ment of  property,  regulation  of  affairs,  and  transfer  of  stock.  § 651, 


392 


CLASSIFIED  CORPORATION  LAWS. 


subdiv.  6.  They  may  also  be  adopted  by  the  directors,  subject  to  the 
superior  authority  of  the  stockholders.  § 657. 

Certificates.  None  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  charter  with  Secretary  of  State 
(§  646),  and  may  extend  fifty  years.  If  period  is  not  limited  in  charter, 
it  extends  twenty  years.  § 651,  subdiv.  1. 

Beginning  Business.  Business  may  not  be  commenced  until  ei- 
ther $100,000  of  the  authorized  capital  stock  has  been  paid  in  in  cash, 
or  fifty  per  cent,  thereof  has  been  subscribed  and  ten  per  cent,  paid 
in.  §642,  subdiv.  56;  L.  1901,  Ch.  15.  Must  be  commenced  within 
three  years.  §681. 

Renewal.  Is  allowed  only  for  corporations  not  for  profit.  §651. 
May  be  effected  by  re-incorporation. 

Forfeiture  of  Charter.  Occurs  for  failure  to  begin  business  with- 
in three  years  after  filing  charter,  for  misuse  or  non-user  of  franchises 
(§§681,  2900),  or  for  violation  of  laws  against  combinations  and  mo- 
nopolies. L.  1903,  Ch.  94.  On  failure  to  pay  annual  franchise  tax 
forfeiture  may  be  effected  by  mere  record  thereof  by  Secretary  of 
State.  § 5243].  Members  of  a corporation  whose  charter  has  been 
forfeited,  acting  under  the  old  name,  are  guilty  of  a misdemeanor. 
L.  1905,  Ch.  139. 

Dissolution.  Voluntary  dissolution  may  be  had  by  application 
to  court  of  competent  jurisdiction.  §680. 

6.  Corporate  Powers. 

General.  The  usual  common  law  powers  are  enumerated.  §651. 

To  Hold  Property.  This  power  is  granted  generally  for  corpor- 
ate purposes  a.nd  as  to  property  taken  as  security  or  in  payment  of 
debts.  § 651.  All  land  held  otherwise  by  any  corporation  must  be 
conveyed  within  fifteen  years  after  acquisition.  § 749a-d.  Companies 
formed  expressly  to  do  business  in  other  states  and  countries  can 
hold  real  estate  in  Texas  only  to  the  extent  of  office  facilities.  §642, 
subdiv.  39;  L.  1901,  Ch.  43. 

Its  Own  Stock.  A corporation  may  purchase  its  own 
stock.  Howe,  etc.  Co.  v.  Jones,  51  S.  W.  24  (1899). 

Stock  of  Other  Corporations.  Companies  may  be  form- 
ed to  promote  and  hold  stock  of  manufacturing  companies.  § 642, 
subdiv.  49.  But  the  Anti-Trust  Law  includes  in  its  definition  of  pro- 
hibited monopolies  and  combinations,  such  direction  of  affairs  of  two 
or  more  corporations  under  the  same  management  or  control,  and 
such  acquiring  by  one  corporation  of  the  stock,  bonds  or  franchises 
and  properties  of  any  other  corporation  as  creates  a trust  or  tends 
to  lessen  competition.  L.  1903,  Ch.  94. 


TEXAS. 


393 


To  Borrow  Money.  Corporate  indebtedness  must  at  no  time  ex- 
ceed authorized  capital  stock.  Property  and  income  may  be  pledged 
for  loans.  § 653. 

To  Do  Business  in  Other  States.  There  are  special  provisions 
for  incorporating  for  the  purpose  of  carrying  on  certain  lines  of  busi- 
ness in  any  part  of  the  world.  §642,  39;  L.  1901,  Ch.  43.  All  strictly 
corporate  acts,  such  as  stockholders’  meetings,  etc.,  must  take  place 
at  the  principal  office  in  the  State,  but  directors  and  agents  may  act 
in  other  states.  Co.  v.  Laigle,  59  Tex.  339;  Beattie  v.  Hardy,  93  Tex. 
131  (1900). 

Consolidation  or  Merger.  Not  permitted  as  to  general  corpora- 
tions. Bonnet  v.  First  Nat.  Bk.,  60  S.  W.  325  (1900);  Thayer  v. 
Wathem,  44  S.  W.  906  (1897).  Corporations  may  not  enter  into  a 
contract  of  partnership.  Sabine  Tram  Co.  v.  Bancroft,  40  S.  W.  837. 
Bonds  issued  by  one  corporation  for  the  benefit  of  another  are  ultra 
vires  and  void.  N.  S.  Ry.  Co.  v.  Worthington,  30  S.  W.  1055  (1895). 

Amendment  of  Charter.  May  be  made  on  majority  vote  of  stock- 
holders; any  such  amendment  to  be  filed  and  recorded  as  provided 
for  original  charter.  § 647.  Amendments  must  be  germane  to  the 
original  purposes.  § 649.  Secretary  of  State  issues  a certificate  of 
filing.  § 648. 


7.  Capital  Stock. 

Amount.  Not  prescribed  but  must  be  stated  in  charter.  §643. 

Initial  Payment.  Must  be  either  $100,000  in  cash,  or  ten  per  cent, 
of  the  total  authorized  capital  stock,  not  less  than  fifty  per  cent, 
thereof  being  subscribed.  §642,  56;  L.  1901,  Ch.  15. 

Consideration  for  Issue.  Stock  may  not  be  issued  except  for 
money  paid,  labor  done  or  property  actually  received.  §652;  Const., 
Art.  XII,  §6.  Assessments  may  be  made  by  the  directors  on  thirty 
days’  notice  in  the  manner  prescribed  by  the  by-laws.  §§  667,  668. 

Increase  or  Decrease.  Increase  of  capital  stock  not  exceeding 
double  the  amount  of  the  authorized  capital  stock  may  be  effected 
by  a majority  vote  of  the  stockholders  cast  as  prescribed  by  the  by- 
laws, the  certificate  thereof  to  be  filed  and  recorded  as  was  original 
charter.  §652.  No  provisions  as  to  decrease. 

Classes  of  Stock.  No  general  provisions. 

Par  Value  of  Shares.  Not  prescribed,  but  number  of  shares  into 
which  stock  is  divided  must  be  stated  in  charter.  § 643. 

Stock  Certificates.  No  provisions. 

Transfer  of  Stock.  Is  made  only  on  the  books  of  the  company 
in  manner  prescribed  by  the  by-laws.  § 666. 


394 


CLASSIFIED  CORPORATION  LAWS. 


8.  Stockholders. 

Rights  and  Powers.  The  stockholders  may  make  by-laws  (§  657) 
and  control  amendments  to  charter  by  majority  vote.  §§647,  652. 
One-third  of  the  stockholders  may  require  reports  and  payment  of 
dividends.  § 663. 

Liability.  The  stockholders  are  liable  only  for  unpaid  subscrip- 
tions (§686),  enforceable  after  execution  against  corporation  is  re- 
turned unsatisfied.  §§  671,  672,  684-686. 

Meetings.  Must  be  held  within  the  State.  § 673.  Annual  elec- 
tion may  be  regulated  by  by-laws.  §§655-659.  Notice  and  quorum 
should  be  prescribed  by  by-laws.  Voting  may  be  in  person  or  by 
proxy. 

9.  Directors. 

Number.  Must  be  not  less  than  three  nor  more  than  thirteen. 
§ 651.  May  be  changed  by  the  stockholders  within  these  limits  by 
vote  as  prescribed  by  the  by-laws.  §§  651,  658. 

Qualifications.  No  statutory  requirements. 

Powers.  The  general  management  of  the  corporate  affairs  and 
property  rests  with  the  directors.  § 661.  By-laws  may  be  adopted 
by  them  subject  to  control  of  stockholders.  §657.  They  fill  vacan- 
cies on  the  board.  § 655.  They  are  trustees  on  dissolution  unless 
a receiver  is  appointed  by  court.  §§  682,  683. 

Liability.  For  declaring  and  paying  any  dividend  when  the  cor- 
poration is  insolvent  or  which  would  render  it  insolvent,  the  assenting 
directors  are  liable,  jointly  and  severally,  to  the  extent  of  such  pay- 
ment, for  all  corporate  debts  then  existing  or  contracted  while  they 
respectively  remain  in  office.  Dissenting  directors  must  file  their 
objections  in  writing  to  exempt  themselves  from  liability.  §670. 

Meetings.  No  statutory  provision.  A majority  is  a quorum. 
§655;  Leary  v.  Bank,  63  S.  W.  149  (1901). 

Executive  Committee.  No  provisions. 

10.  Officers. 

A president,  a secretary  and  a treasurer  must  be  elected  by  the 
directors.  The  president  must  be  a director.  Any  other  necessary 
officers  may  be  appointed.  § 656. 

11.  Principal  Office. 

Must  be  maintained  in  the  State,  with  an  agent  in  charge  upon 
whom  service  may  be  made.  §§  673,  1222;  Const.,  Art.  X,  § 3. 
A charter  may  be  granted  permitting  the  transaction  of  business  at 
home  and  abroad,  but  the  principal  office  must  be  kept  in  Texas. 
Beattie  v.  Hardy,  93  Tex.  131  (1900). 


TEXAS. 


395 


12.  Corporate  Books. 

What  Required.  Books  must  be  kept,  showing  amount  of  stock 
subscribed,  name  of  owners,  amount  owned  by  each,  amounts  paid  in 
and  by  whom,  and  all  transfers  with  dates;  also  the  corporate  assets 
and  liabilities,  and  the  names  and  residences  of  officers.  Const.,  Art. 
X,  § 3.  The  directors  are  charged  with  the  duty  of  keeping  records 
of  stock  subscribed  and  transferred  and  of  all  business  transactions. 
§ 662. 

Where  Kept.  At  the  principal  office  in  the  State.  Const.,  Art. 

X,  § 3. 

Examination  of.  On  request  of  one-third  of  the  stockholders 
the  directors  must  report  in  writing  the  financial  condition  of  the  cor- 
poration and  the  amount  of  its  business.  § 663.  Books  and  records 
are  to  be  open  to  the  inspection  of  stockholders  at  all  reasonable 
times.  § 662;  Const.,  Art.  X,  § 3.  The  secretary  or  other  officer  in 
charge  of  the  books  must  furnish  to  any  creditor  or  his  attorney,  in 
action  to  enforce  stockholders’  liability,  list  of  stockholders,  with  resi- 
dences and  amounts  of  holdings.  § 672. 


13.  Reports. 

None  required  for  business  corporations. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  must  file 
with  the  Secretary  of  State  a certified  copy  of  their  articles  of  incor- 
poration (§  745),  and  Secretary  of  State  thereupon  issues  permit  for 
ten  years.  § 748.  They  must  also  furnish  satisfactory  proof  that 
either  $100,000  in  cash  or  fifty  per  cent,  of  their  authorized  capital 
stock  has  been  subscribed  and  at  least  ten  per  cent,  paid  in  before 
permit  will  issue.  § 642,  subdiv.  56;  L.  1901,  Ch.  15.  Fees  same  as 
of  domestic  corporations.  § 2439;  L.  1905,  Ch.  91.  They  must  main- 
tain an  office  in  the  State  with  an  agent  on  whom  process  may  be 
served.  § 1222;  Const.,  Art.  X,  § 3.  No  foreign  corporation  may 
construct  or  operate  a railroad  in  the  State  of  Texas  without  incor- 
porating there.  L.  1903,  Ch.  65;  Const.,  Art.  X,  § 6. 

Penalties  for  Non-Compliance.  Inability  to  sue  in  the  State. 
§ 746.  On  failure  to  pay  annual  franchise  tax,  the  right  to  do  business 
in  the  State  is  forfeited.  § 5243]'. 

Taxation.  An  annual  franchise  tax  is  paid  on  authorized  capital 
stock  on  or  before  May  1st  of  each  year,  as  follows:  $1  on  each 

$1,000  or  fractional  part  thereof  up  to  $100,000;  $1  on  each  $5,000  or 
fractional  part  thereof  in  excess  of  $100,000  up  to  $1,000,000;  $1  for 
each  $20,000  or  fractional  part  thereof  in  excess  of  $1,000,000  up  to 
$10,000,000;  $1  for  each  $50,000  or  fractional  part  thereof  over  $10,- 
000,000.  Minimum  fee,  $25.  § 5243^  amended  by  L.  1905,  Ch.  19. 

Books.  Reports.  No  provisions. 


396 


CLASSIFIED  CORPORATION  LAWS. 


(Texas) 

Attachments  Against.  Lie  on  the  ground  of  being  a foreign  cor- 
poration or  acting  as  such.  § 186. 

15.  Combinations  and  Monopolies. 

A new  Anti-Trust  Law,  defining  and  prohibiting  trusts,  monopo- 
lies and  conspiracies,  was  adopted  March  31,  1903  (Ch.  94),  which  re- 
enacts and  even  extends  the  extreme  provisions  of  the  previous  acts 
which  it  repeals.  A fine  is  imposed  of  $50  for  each  day  of  continued 
violation,  also  forfeiture  of  charter  or  right  to  do  business,  imprison- 
ment of  individual  offenders  from  one  to  ten  years,  and  fines  and  im- 
prisonment of  witnesses  refusing  to  testify.  This  law  was  passed 
unanimously  by  the  Senate  and  with  only  two  nays  in  the  House,  to 
take  effect  immediately,  the  former  law  having  been  held  unconstitu- 
tional. 


UTAH. 


1.  Corporation  Laws.* 

Constitution.  (1896.)  Corporations  may  not  be  formed  by 
special  act  but  only  under  general  laws.  Art.  XII,  § 1.  Public  owner- 
ship or  interest  in  railroads,  telegraph  companies  or  other  private  cor- 
porations forbidden.  Art.  VI,  § 31.  Stock  is  not  to  be  issued  except  to 
bona  fide  subscribers,  nor  is  any  corporation  to  issue  any  bond  or 
other  obligation  for  the  payment  of  money,  except  for  money  or 
property  received  or  labor  done.  Art.  XII,  § 5.  Fictitious  increase 
of  stock  or  indebtedness  is  void.  Id.  All  corporations  doing  business 
in  the  State  must  have  one  or  more  places  of  business  therein,  an 
authorized  agent  upon  whom  process  may  be  served,  and  certified 
copies  of  their  articles  of  incorporation  must  be  filed  with  the  Secre- 
tary of  State.  Id.,  § 9.  Blacklisting  of  employees  is  forbidden.  Id., 
§ 19.  Trusts  and  combinations  are  prohibited.  Id.,  § 20.  Foreign 
corporations  are  not  allowed  to  do  business  in  the  State  upon  more 
favorable  terms  than  domestic  corporations.  Id.,  § 6.  Consolidation 
of  railroad  companies  owning  competing  lines  prohibited.  Id.,  § 13. 

Statutes.  The  general  corporation  law  is  contained  in  Revised 
Statutes  of  1898,  Title  11,  amended  by  Laws  of  1899,  1901,  1903  and 
1905.  Under  it,  corporations  may  be  formed  for  any  purpose  for 
which  individuals  may  lawfully  associate.  § 314.  Chapters  3 to  7 of 
Title  ii  regulate  banking,  building  and  loan,  insurance,  trust,  guar- 
anty and  railroad  companies. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  On  filing  ar- 

ticles of  agreement,  25  cents  on  each  $1,000.  For  certificate  of  incor- 
poration, $5.  § 965;  L.  1905,  Ch.  127.  Recording,  20  cents  per  folio; 

copies,  15  cents  per  folio;  affixing  seal  and  certificate,  $1. 

To  County  Clerk:  For  filing  and  indexing  articles,  $2.50;  record- 

ing, 20  cents  per  folio;  approving  and  filing  oaths  and  bonds  of  offi- 
cers, 50  cents  for  each  instrument.  § 972;  L.  1905,  Ch.  73. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  Capital  stock  is  not  taxed  when  the  property  it 
represents  is  taxed.  Const.,  Art.  XIII,  § 2. 

Special  regulations  are  provided  as  to  assessment  of  net  pro- 
ceeds of  mines.  §§  2566-2573;  L.  1899,  Ch.  68;  Const.,  Art.  XIII,  § 4. 

* References  are  to  Revised  Statutes  of  1898,  Title  11,  except  as  otherwise 
stated. 


397 


398 


CLASSIFIED  CORPORATION  LAWS. 


General.  To  Secretary  of  State:  For  filing  certificate  of  increase 

of  capital  stock  and  issuing  certificate,  25  cents  on  each  $1,000;  for 
filing  certified  copy  of  other  amendments  to  articles  and  issuing  cer- 
tificate, $5;  for  filing  other  papers,  $5. 

Receiving  and  recording  official  bond,  $2;  filing  trade-mark,  $3; 
filing  notice  of  appointment  of  agent,  $5.  Copies  of  articles  of  incor- 
poration, 15  cents  per  folio;  certificate  and  seal,  $1.  L.  1905,  Ch.  127. 

To  County  Clerk,  for  filing  and  indexing  amendments,  $1.50. 
L.  1905,  Ch.  73. 

3.  Incorporation. 

Incorporators.  Must  be  not  less  than  five,  one  of  whom  must 
be  a resident  of  the  State.  § 314;  L.  1899,  Ch.  52.  They  are  liable 
for  acts  done  and  debts  contracted  before  issuance  of  certificate  of 
incorporation.  Long  v.  Bank,  8 Utah  104. 

Articles  of  Agreement.  An  agreement  must  be  signed  by  each 
of  the  incorporators  and  acknowledged  by  at  least  three  of  them  be- 
fore the  county  clerk  or  a notary  of  the  county  in  which  the  prin- 
cipal place  of  business  has  been  or  is  to  be  established  (§  315,  as 
amended  by  Laws  of  1905,  Ch.  22),  stating: 

(1)  Name.  Similarity  of  names  forbidden.  L.  1899,  Ch. 
52. 

(2)  Precinct  or  city  where  organized. 

(3)  Names  and  home  addresses  of  incorporators. 

(4)  Duration,  which  must  not  be  less  than  three  nor  more 
than  one  hundred  years. 

(5)  Pursuit  or  business,  specified  in  general  terms. 

(6)  Place  of  general  business. 

(7)  Amount  of  stock  each  party  has  subscribed. 

(8)  Par  value  of  shares  and  limit  of  capitalization. 
Neither  is  prescribed  by  law. 

(9)  Number  and  kind  of  officers;  their  qualifications  and 
term  of  office;  time  and  manner  of  their  election;  removal 
and  resignation,  with  the  names  of  those  to  serve  until  the 
first  general  election;  directors  not  to  be  less  than  three  nor 
more  than  twenty-five. 

(10)  Number  of  directors  necessary  for  quorum.  Must 
not  be  less  than  one-fourth  the  entire  number. 

(11)  Whether  or  not  private  property  of  stockholders  is 
liable  for  corporate  obligations. 

(12)  Such  additional  clauses  as  the  incorporators  deem 
necessary  for  conducting  the  business  and  for  the  future 
safety  and  welfare  of  the  company.  L.  1905,  Ch.  22. 


Utah. 


399 


Where  property  is  taken  in  exchange  for  stock  subscribed  for 
by  the  parties,  the  articles  must  set  forth  a description  of  the  property 
and  its  fair  cash  value  and  be  accompanied  by  an  affidavit  of  three 
persons  familiar  with  the  property,  that  it  is  reasonably  worth  the 
par  value  of  the  stock  received.  § 316;  L.  1905,  Ch.  ill.  Mining  and 
irrigation  companies  are  exempt  from  this  latter  provision. 

These  articles  of  agreement  can  not  be  filed  until  10  per  cent,  or 
more  of  the  stock  has  been  subscribed  and  paid  in,  when  at  least  three 
of  the  incorporators  must  prepare  an  affidavit,  which  must  be  added 
to  the  articles,  showing  that  business  has  been  commenced  or  that  it 
is  their  bona  fide  intention  to  organize  and  commence  busienss  under 
the  agreement,  and  further  that  they  verily  believe  that  each  party 
thereto  has  paid,  or  is  able  to  and  will  pay  the  amount  of  his  sub- 
scription. L.  1905,  Ch.  hi. 

Filing  and  Recording.  Within  ten  days  after  its  execution,  the 
agreement,  affidavit  of  the  incorporators,  and  oaths  of  office  of  officers 
named  to  serve  till  first  election,  must  be  filed  and  recorded  in  the 
office  of  the  clerk  of  the  county  in  which  the  general  business  is  to 
be  conducted  (§§  317,  318),  who  thereupon  issues  a certificate  of  such 
filing  under  seal.  This,  together  with  a copy  of  the  agreement,  affi- 
davit and  oaths,  is  filed  with  the  Secretary  of  State  who  thereupon 
issues  a certificate  of  incorporation  under  the  Great  Seal  of  the 
State.  § 319. 

4.  Organization. 

First  Meetings.  No  special  provisions.  No  statutory  authority 
for  holding  meetings  without  the  State.  Officers  and  directors  to 
serve  till  the  first  general  election  are  named  in  the  agreement. 

By-Laws.  May  be  made  by  the  stockholders  at  general  meeting 
or  by  the  directors.  § 322;  L.  1905,  Ch.  131.  The  laws  of  1905  omit 
the  provisions  which  made  by-laws  passed  by  directors  subject  to 
approval  of  stockholders. 

Certificates.  Officers  must  take  and  subscribe  oath  of  office 
which  is  filed  with  County  Clerk.  §§  317-319;  L.  1905,  Ch.  73.  No 
other  certificates  required  to  show  completed  organization. 

5.  Corporate  Existence. 

When  Commenced.  On  issuance  of  certificate  of  incorporation 
by  Secretary  of  State.  § 319.  Must  continue  not  less  than  three  nor 
more  than  one  hundred  years.  § 315;  L.  1905,  Ch.  22.  Continues  for 
purpose  of  winding  up  affairs  after  expiration  or  forfeiture.  § 323. 

Beginning  Business.  May  be  commenced  as  soon  as  10  per  cent, 
of  the  capital  stock  has  been  subscribed  and  paid  in.  § 316;  L.  1905, 
Ch.  hi.  Must  be  commenced  within  two  years.  § 321. 

Renewal.  No  statutory  provisions. 

Forfeiture  of  Charter.  Occurs  upon  non-user  for  two  years. 
§ 321.  Quo  warranto  lies  for  non-user  or  misuse.  §§  3610,  3611-3626. 


400 


CLASSIFIED  CORPORATION  LAWS. 


Franchise  is  revoked  if  corporation  refuses  to  withdraw  from  illegal 
pool  or  trust  within  30  days  after  notice  by  Secretary  of  State. 
§§  1758,  I759- 

Dissolution.  May  be  had  on  application  to  the  district  court 
where  principal  office  is  located,  showing  vote  of  two-thirds  of  stock  in 
favor  thereof,  and  that  corporate  obligations  have  been  extinguished. 
§§  3661-3667. 

6.  Corporate  Powers. 

General.  The  usual  common  law  powers  are  enumerated  in 
§ 322;  L.  1905,  Ch.  131. 

To  Hold  Property.  No  limitation  on  power  to  hold  personalty, 
and  practically  none  as  to  realty,  for  a corporation  may  hold  “such 
real  estate  as  may  be  necessary,  useful  or  desirable  for  it  to  own, 
use  or  dispose  of  for  its  purposes.”  § 322;  L.  1905,  Ch.  131.  Special 
power  is  given  to  mining  companies  when  dealing  in  mineral  lands. 
Id.;  Hearst  v.  Mining  Co.,  28  Utah  184  (1905). 

Its  Own  Stock.  If  sold  for  delinquent  assessment,  and 
no  bidder  is  found  who  will  pay  the  amount  due,  the  corporation  may 
purchase  it  at  that  price  and  so  enter  it  on  the  books.  § 367.  It  is 
held  as  treasury  stock  and  must  be  disposed  of  as  expressly  provided 
for  in  the  by-laws  or,  in  default  of  such  provision,  by  the  directors,  for 
the  best  interests  of  the  corporation.  § 368;  L.  1903,  Ch.  94. 

Stock  of  Other  Corporations.  It  is  a misdemeanor  for 
directors  to  give  stock,  notes,  bonds  or  other  evidences  of  debt  of 
their  corporation  for  the  stock,  bonds  or  pledges  of  another  corpora- 
tion. § 4411;  Bear  River  Co.  v.  Hanley,  15  Utah  506.  Irrigation  com- 
panies may  hold  stock  in  other  irrigation  companies  if  so  provided 
in  original  or  amended  articles  of  agreement.  L.  1905,  Ch.  108,  § 57. 

To  Borrow  Money.  The  capital  stock  must  not  be  diminished 
to  an  amount  less  than  50  per  cent,  in  excess  of  corporate  indebted- 
ness. § 338;  L.  1905,  Ch.  131.  Corporations  must  not  issue  bonds  or 
other  obligations  except  for  money,  labor  or  property,  and  fictitious 
increase  of  indebtedness  is  void.  Const.,  Art.  XII,  § 5. 

To  Do  Business  in  Other  States.  When  so  provided  in  the  ar- 
ticles of  incorporation,  meetings  of  the  board  of  directors  may  be 
held,  for  the  transaction  of  any  business  of  the  corporation,  at  such 
place  without  the  State  as  the  directors  may  by  resolution  or  by-law 
provide.  § 324;  L.  1903,  Ch.  94. 

Consolidation  or  Merger.  Is  permitted  between  domestic  corpor- 
ations of  the  same  kind  engaged  in  the  same  general  business  in  the 
same  vicinity,  by  a majority  vote  of  the  outstanding  stock  of  each 
corporation,  at  a meeting  called  for  that  purpose  on  thirty  days’ 
published  notice.  It  may  be  effectuated  through  simple  merger  or 
by  the  formation  of  a new  corporation  to  take  over  the  combined 
franchises  and  property.  §§  340,  341;  L.  1905,  Ch.  131. 

Consolidation  of  competing  railroads  is  prohibited.  Const.,  Art. 
XII,  § 13. 


UTAH. 


401 


Amendment  of  Charter.  Articles  of  incorporation  may  be  amend- 
ed in  any  respect,  conformable  to  law,  by  majority  vote  of  the  out- 
standing stock  at  meeting  duly  notified  by  publication  for  that  pur- 
pose. The  original  purpose  of  the  corporation  may  not  be  changed 
unless  all  the  stockholders  consent.  Adding  to  purposes  or  extend- 
ing powers  is  not  such  a change.  § 338.  Unanimous  consent  of  the 
stockholders  is  required  to  impose  liability  on  full  paid  stock.  Id. 
Amendments  must  be  duly  certified  and  filed  and  recorded  as  were 
the  original  articles.  § 339;  L.  1903,  Ch.  94. 

7.  Capital  Stock. 

Amount.  No  limitations. 

Initial  Payment.  Ten  per  cent,  of  authorized  capital.  § 316; 
L.  1905,  Ch.  111. 

Consideration  for  Issue.  May  be  money  or  property,  but,  if  latter, 
rigid  affidavits  are  required  to  show  good  faith.  § 316;  L.  1905,  Ch.  hi. 
If  property  taken  in  payment  of  a subscription  is  worthless,  the  sub- 
scriber making  such  payment  is  liable  for  any  deficiency.  Hardware 
Co.  v.  Milling  Co.,  13  Utah  423.  Stock  may  not  be  issued  except  to 
bona  fide  subscribers  or  their  assignees.  Fictitious  issues  are  void. 
Const.,  Art.  XII,  § 5. 

Assessments  may  not  be  made  on  full  paid  stock  for  any  purpose 
unless  so  provided  in  articles  of  agreement  (§  354),  and  no  amend- 
ment to  make  it  assessable  may  be  made  except  by  unanimous  con- 
sent of  stockholders.  § 338.  Until  fully  paid  the  directors  may  levy 
assessments  for  corporate  purposes  as  articles  prescribe  or,  if  no 
provision  has  been  made,  the  law  contains  minute  , directions  for 
assessments  and  sale  of  stock  on  default.  §§  355-373;  L.  1905,  Ch.  27. 

Increase  or  Decrease.  Of  capital  stock  may  be  effected  by  amend- 
ment of  articles  of  agreement.  No  decrease  may  reduce  the  amount 
to  less  than  50  per  cent,  in  excess  of  indebtedness.  § 338;  Const., 
Art.  XII,  § 5. 

Classes  of  Stock.  May  be  provided  for  by  articles  of  incorpor- 
ation on  terms  and  with  voting  power  as  therein  prescribed.  § 335; 
L.  1903,  Ch.  59. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  No  provisions. 

Transfer  of  Stock.  May  be  made  by  endorsement  and  delivery, 
but  corporation  may  treat  stockholder  of  record  as  privileged  to  vote 
and  receive  dividend  till  transfer  is  entered  on  books  of  the  com- 
pany, or  new  certificate  is  issued. 

8.  Stockholders. 

Rights  and  Powers.  Majority  vote  may  amend  charter  or 
effect  consolidation.  L.  1905,  Chs.  30,  131.  Two-thirds  may  dissolve. 


402 


CLASSIFIED  CORPORATION  LAWS. 


§ 3662.  Two  may  call  elections,  when  not  held  within  three  months 
after  date  provided.  § 326.  A majority  may  remove  a director — un- 
less otherwise  provided  in  articles  or  by-laws — at  a meeting,  which 
may  be  called  by  stockholders  owning  one-half  of  the  stock,  if  direc- 
tors refuse  to  act.  § 327;  L.  1903,  Ch.  94;  Fish  v.  Patton,  7 Utah  400. 
Unless  otherwise  provided  by  the  articles  of  incorporation,  a majority 
vote  of  the  stockholders  is  necessary  to  dispose  of  mining  property 
and  other  real  estate.  § 322;  L.  1905,  Ch.  131. 

Liability.  Unpaid  stock  is  liable  for  corporate  debts;  any  further 
liability  must  be  expressly  prescribed  in  the  articles  of  incorporation, 
or  by  subsequent  amendment  by  unanimous  consent  of  the  stock- 
holders. §§  331,  338,  354;  Crofoot  v.  Thatcher,  19  Utah  212  (1899); 
Hardware  Co.  v.  Milling  Co.,  13  Utah  423. 

Actions  to  enforce  liability  must  be  brought  within  three  years 
after  discovery  of  the  facts.  § 2897. 

Meetings.  Stockholders’  meetings  must  be  held  within  the  State. 
Unless  required  by  articles  of  agreement  or  by-laws,  no  notice  need 
be  given  of  annual  or  stated  meetings  of  the  stockholders.  § 334. 
Special  meetings,  unless  otherwise  provided  in  articles  or  by-laws, 
may  be  called  by  the  president,  by  any  three  directors,  or  by  stock- 
holders owning  not  less  than  one-third  of  the  stock,  on  personal  notice 
of  five  days,  or  by  publication  in  a daily  newspaper  having  general 
circulation  in  the  county  in  which  the  principal  place  of  business  is 
located,  for  two  weeks;  or  in  a weekly  paper  for  three  weeks.  § 334. 

Quorum.  Articles  of  incorporation  or  by-laws  may  provide  for 
this,  and  for  adjournments  until  quorum  is  obtained,  but  in  the  ab- 
sence of  provision,  whatever  amount  of  stock  is  represented  at  a 
meeting  may  act  by  a majority  vote.  § 336. 

Voting.  Unless  otherwise  provided  by  articles,  each  stockholder 
has  one  vote  for  each  share;  voting  by  proxy  is  permitted.  L.  1903, 
Ch.  59.  Whenever  any  portion  of  its  stock  is  held  by  a corporation, 
a majority  of  the  remaining  stock  is  a majority  of  the  stock  for  all^ 
voting  purposes.  § 337. 


9.  Directors. 

Number.  Must  be  not  less  than  three  nor  more  than  twenty-five. 
§ 315.  They  may  be  removed  by  a majority  vote  of  the  stock.  § 327; 
L.  1903,  Ch.  94.  They  may  be  classified,  one-third  to  be  elected  an- 
nually. § 315;  L.  1905,  Ch.  22. 

Qualifications.  They  must  all  be  stockholders  and  at  least  one 
a resident  of  the  State.  § 324.  They  must  take  oath  of  office.  § 317. 
In  corporations  with  franchises  in  two  or  more  states,  or  engaged  in 
interstate  commerce,  no  directors  need  be  residents  or  stockholders, 
unless  expressly  required  by  the  articles  of  incorporation.  § 324; 
L.  1903,  Ch.  94.  Compensation  can'  not  be  recovered  without  agree- 
ment therefor.  Pyper  v.  Ass’n,  20  Utah  9 (1899). 

Powers.  They  may  make  by-laws  if  authorized  by  stockholders. 
§ 322;  L.  1905,  Ch.  131.  They  may  fill  vacancies  on  the  board.  § 327. 


UTAH. 


403 


Liability.  There  are  penal  provisions  against  misconduct  of 
directors  and  officers.  §§  4408-4422.  Also  quo  warranto  proceedings. 
§§  3609-3626. 

Meetings.  Must  be  held  at  the  principal  office  in  the  State  un- 
less the  articles  of  incorporation  prescribe  otherwise.  § 324;  L.  1903, 
Ch.  94.  All  meetings  are  presumed  to  be  regular  and  an  emergency 
may  obviate  the  necessity  of  notice.  Singer  v.  Co.,  17  Utah  143; 
Leavitt  v.  Co.,  3 Utah  265.  Number  necessary  to  a quorum  is  to  be 
prescribed  in  articles  of  incorporation,  but  must  be  at  least  one-fourth 
of  the  entire  board.  § 315. 

Executive  Committee.  Not  specifically  provided  for  by  law,  but 
may  undoubtedly  be  provided  for  in  articles  of  incorporation.  § 315. 

10.  Officers. 

General.  The  officers,  their  qualifications  and  terms  of  office, 
time  and  manner  of  election,  and  method  of  removal  or  of  resigna- 
tion are  to  be  designated  in  the  articles  of  incorporation.  § 315; 

L.  1905,  Ch.  22. 

Refusal  on  the  part  of  officers  to  allow  stockholders  to  inspect 
or  take  extracts  from  books  is  a misdemeanor.  § 4415.  Other  offences, 
such  as  false  statements,  illegal  dividends,  etc.,  are  provided  against 
by  Penal  Code,  §§  1756,  4064,  4065,  4375,  4408-4422. 

11.  Principal  Office. 

Corporation  must  maintain  an  office  in  the  State.  Const.,  Art. 
XII,  § 9;  L.  1903,  Ch.  94.  Its  place  may  be  changed  by  regular  amend- 
ment, but  when  such  change  is  from  one  county  to  another,  the  Sec- 
retary of  State,  in  addition  to  issuing  certificate  of  such  amendment 
issues  also  a certified  copy  of  the  articles  of  incorporation,  which  is 

then  recorded  in  the  office  of  the  clerk  of  the  county  to  which  it  is 

moved.  § 339;  L.  1903,  Ch.  94. 

12.  Corporate  Books. 

What  Required.  Every  corporation  must  keep  true  and  correct 
books  of  its  proceedings  and  business.  § 328.  These  must  show  the 
original  stockholders,  their  interests,  the  amount  paid  on  their  shares, 
and  all  transfers  thereof.  § 329. 

Where  Kept.  At  the  principal  office  in  the  State.  § 339;  L.  1903, 
Ch.  94. 

Examination  of.  All  books  of  any  corporation  shall,  at  all  rea- 
sonable hours,  be  subject  to  the  inspection  of  any  bona  fide  stock- 
holder of  record  (§  329),  who  may  also  take  copies  or  extracts. 
§ 4415- 

13.  Reports. 

Assessors  may  require  from  the  president,  secretary,  cashier  or 
managing  agent  report  of  corporate  condition  on  the  second  Monday 


404 


CLASSIFIED  CORPORATION  LAWS. 


(Utah) 

in  January.  Form  given  in  L.  1905,  Ch.  125.  No  other  reports  are 
required  except  for  corporations  engaged  in  banking  or  insurance. 
§§  388,  398,  408,  430. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Must  file  with  Secretary  of 
State  and  Clerk  of  the  county  where  principal  office  in  State  is  lo- 
cated: (1)  Certified  copy  of  articles  of  charter,  and  by-laws,  and  all 

amendments  to  same.  (2)  A copy  of  resolution  of  board  of  directors 
certified  by  the  president  and  secretary  under  the  corporate  seal, 
accepting  constitutional  provisions.  (3)  Designation  of  agent  resi- 
dent in  county  of  principal  office  to  receive  service  of  process.  § 351. 

Foreign  corporations  shall  not  be  allowed  to  transact  business 
on  more  favorable  terms  than  domestic  companies.  Const.,  Art.  XII, 
§ 6;  Hiskey  v.  Building  Co.,  27  Utah  409. 

Fees  as  for  domestic  corporations  and  $25  additional;  and  for 
issuing  certificate  of  compliance,  $5;  for  filing  appointment  of  agent, 
$5.  L.  1905,  Ch.  127;  Booth  & Co.  v.  Wiegand,  28  Utah  372  (1905). 

Penalties  for  Non-Compliance.  Failure  to  comply  with  the  statu- 
tory requirements  entails  denial  of  the  benefits  of  the  corporation 
laws  of  the  State.  It  also  renders  the  resident  agent  of  the  corporation 
personally  liable  for  all  corporate  debts,  and  exposes  him  to  the  pen- 
alties of  a misdemeanor.  § 352. 

Taxation.  Foreign  corporations  are  taxed  on  their  capital  stock, 
after  deducting  the  value  of  any  property  represented  by  such  stock 
which  is  taxed  in  the  State.  Comm.  Nat.  Bk.  v.  Chambers,  21  Utah 
324- 


Books.  No  statutory  provisions. 

Reports.  None  required. 

Attachments  Against.  Foreign  corporations  are  subject  to  the 
same  penal  provisions  applicable  to  domestic  corporations.  §§  4408- 
4422. 

15.  Combinations  and  Monopolies. 

Are  provided  against  (§§  1752-1762),  with  penalties  of  fines  from 
$100  to  $2,000  for  first  offence;  $500  to  $5,000  for  second  offence; 
$5,000  to  $10,000  for  third  offence;  $15,000  for  every  subsequent  offence. 
§ 1755-  Officers  are  punished  by  fine,  $100  to  $1,000,  and  imprison- 
ment, not  to  exceed  one  year  in  county  jail,  or  both.  § 1756.  Con- 
tracts are  made  void  (§  1757),  and  corporate  rights  and  franchises 
are  forfeited,  after  thirty  days’  notice  from  the  Secretary  of  State  to 
withdraw  from  the  combination,  by  action  brought  by  Attorney  Gen- 
eral. §§  1758-1760.  They  are  also  liable  in  treble  damages  to  per- 
sons injured.  § 1761;  Const.,  Art.  XII,  § 20. 


Enactments  of  1906. 


1.  Corporation  Laws. 

Statutes.  Section  3704  of  Vermont  Statutes  (1894)  is  amended  so 
as  to  include  telegraph  and  telephone  companies  and  companies  to 
deal  in  real  estate,  among  the  corporations  which  may  be  formed 
under  the  general  law.  L.  1906,  Act  No.  116. 

2.  Taxes  and  Fees. 

Franchise  Tax.  Section  51  of  Act  No.  20,  L.  1902,  is  amended  as 
follows : 

All  domestic  corporations  failing  to  file  annual  license  tax  returns 
and  to  pay  their  annual  license  taxes  on  or  before  the  first  day  of 
April  in  each  year,  shall  cease  to  exist  on  that  date.  The  Secretary  of 
State  shall  keep  a record  of  all  corporations  complying  with  the  re- 
quirements as  to  payment  of  franchise  tax  and  his  certificate  that  the 
name  of  any  corporation  is  not  on  such  record  shall  be  prima  facie 
evidence  that  such  corporation  has  ceased  to  exist.  L.  1906,  Act  No. 
36,  §§  8-24. 

The  provisions  of  this  act  are  very  stringent  and  the  dissolution 
of  delinquent  corporations  is  effected  by  the  mere  fact  of  delinquency 
without  legal  procedure,  though  the  act  provides  that  any  stockholder, 
creditor  or  the  Commissioner  of  State  Taxes  may  apply  for  a re- 
ceiver to  wind  up  its  affairs. 

4,  Organization. 

First  Meetings.  “ The  payment  of  the  charter  tax  on  or  before 
the  first  day  of  March  in  any  year,  shall  extend  the  time  one  year 
from  . such  day  in  which  a corporation  may  organize  under  its  charter, 
notwithstanding  a time  limit  may  be  fixed  in  such  charter  for  its 
organization.”  L.  1906,  Act  No.  38. 

14.  Foreign  Corporations. 

General.  A foreign  corporation  authorized  to  do  business  in  the 
State,  shall  file  a certificate  when  it  ceases  to  do  business  in  the  State 
and  shall  pay  its  annual  taxes  up  to  the  time  of  such  filing. 

A foreign  corporation  may  change  its  principal  office  in  the  state 
by  a statement  in  writing  under  the  corporate  seal. 

A foreign  corporation  changing  its  name  shall  within  fifteen  days 
file  statement  of  such  change  with  the  Secretary  of  State  and  Com- 
missioner of  State  Taxes. 

A foreign  corporation  failing  to  designate  an  agent  on  whom  pro- 
cess and  notice  may  be  served,  within  thirty  days  after  the  death  or 
removal  from  State  of  a previous  agent,  may  be  punished  by  the  revo- 
cation of  its  certificate  to  do  business.  L.  1906,  Act  No.  36,  §§  3-7. 

Penalties  for  Non-Compliance.  A foreign  corporation  carrying  on 


VERMONT. 


business  within  the  State  without  a certificate  or  after  such  certificate 
is  revoked,  or  failing  to  pay  its  annual  license  tax  on  or  before  thirty 
days  from  the  date  when  it  is  payable,  may  be  enjoined  from  doing 
business  in  the  State.  L.  1906.  Act  No.  36,  § 1. 

Taxation.  A foreign  corporation  within  ten  days  after  registra- 
tion must  file  its  annual  license  tax  returns  and  pay  the  pro  rata  pro- 
portion of  the  tax  for  the  unexpired  portion  of  the  current  year,  and 
also  the  tax  due  for  any  previous  time  during  which  it  did  business  in 
the  State.  L.  1906,  Act  No.  36,  § 2. 

16.  General  Provisions. 

Corporations  are  required  to  pay  wages  weekly,  in  cash,  after 
June  1st,  1907.  L.  1906,  Act.  No.  117. 


VERMONT. 


1.  Corporation  Laws.* 

Constitution.  (1793  and  amendments  to  1904.)  Charters  of  in- 
corporation may  be  granted  by  legislature.  Ch.  II,  § 9. 

Statutes.  The  law  of  private  corporations  is  found  in  the  Ver- 
mont Statutes,  1894,  Title  25,  Chapters  164  and  165,  and  amendments 
to  1905.  Corporations  may  be  formed  under  the  general  law  for  any 
object  or  business  not  repugnant  to  public  policy  or  the  laws  of  the 
State,  excepting  telegraph,  telephone,  express,  banking,  insurance, 
railroad,  trust,  savings,  loan  or  real  estate  companies  (§  3704),  all  of 
which  have  special  provisions  in  Titles  21,  24,  26-28.  Taxation  of 
corporations  is  treated  of  in  L.  1902,  Ch.  20,  amended  and  supple- 
mented by  L.  1904,  Ch.  29. 

2.  Taxes  and  Fees. 

Organization  Expenses.  Organization  tax  to  Secretary  of  State: 
On  capital  stock  not  exceeding  $5,000,  $10;  over  $5,000  and  not  ex- 
ceeding $10,000,  $25;  over  $10,000  and  not  exceeding  $50,000,  $50;  over 
$50,000  and  not  exceeding  $200,000,  $100;  over  $200,000  and  not  ex- 
ceeding $500,000,  $200;  over  $500,000  and  not  exceeding  $1,000,000, 
$300;  over  $1,000,000,  $500,  and  practically  the  same  fees  on  introduc- 
ing bill  for  legislative  charter.  L.  1898,  Ch.  19.  Pro  rata  amount  of 
franchise  tax  for  year  must  be  paid.  L.  1902,  Ch.  20,  § 51.  For  re- 
cording and  copies,  7 cents  per  folio  to  any  officer.  § 5414. 

Franchise  Tax.  An  annual  franchise  or  license  tax  is  imposed 
of  $10  on  first  $50,000  or  less  of  capital  stock,  and  $5  on  every  addi- 
tional $50,000;  maximum  tax,  $50.  This  is  payable  on  or  before  March 
1st.  After  March  1st  penalty  of  25  per  cent,  is  added.  After  April 
1st,  50  per  cent.  L.  1902,  Ch.  20,  §§  47-50. 

Local  Taxation.  Shares  of  stock  are  listed  by  the  stockholders 
but  are  not  taxed,  except  when  the  value  of  the  stock  exceeds  the 
value  of  the  property  it  represents,  which  latter  is  assessed  to  the  cor- 
poration. § 383.  The  corporation  must  pay  the  tax  for  non-resident 
shareholders  and  charge  same  against  their  stock  and  dividends.  § 379. 
Manufacturing  plants,  etc.,  are  exempt  from  taxation  for  ten  years 
from  commencing  business,  if  the  town  so  votes.  § 365;  L.  1898, 
Ch.  14. 

General.  On  increase  of  capital  stock,  same  fee  is  paid  as  on 
original  organization.  L.  1900,  Ch.  15. 

* Sections  given,  unless  otherwise  referred,  are  of  Vermont  Statutes,  1894. 

405 


CLASSIFIED  CORPORATION  LAWS. 


-|06 


3.  Incorporation. 

Incorporators.  Must  be  five  or  more  persons  of  lawful  age. 
§ 3704.  No  direct  requirements  as  to  residence  of  incorporators,  but 
at  least  two  directors  must  be  residents  of  the  State.  § 3717. 

Articles  of  Association.  Must  be  in  form  set  out  in  the  statute 
(§  37c>7)>  be  signed  by  the  incorporators  and  set  forth  (§  3705): 

(1)  Name  of  the  corporation.  Any  name  may  be  assumed 
which  is  not  in  use  by  another  corporation.  § 3705.  May  be 
changed  by  two-thirds  vote  of  the  stock,  and  certificate  there- 
of filed  and  recorded  as  in  case  of  increase  or  decrease  of 
capital  stock.  § 3734. 

(2)  Object  or  objects  for  which  established. 

(3)  Place  in  which  business  is  to  be  carried  on. 

(4)  Amount  of  capital  stock.  This  must  not  be  less  than 

$500  nor  more  than  $1,000,000.  § 3728. 

(5)  Names  and  post-office  addresses  of  incorporators. 

Filing  and  Recording.  The  articles  of  association  with  incorpor- 
ation fees  are  submitted  to  the  Secretary  of  State,  who  may  refer  them 
to  a judge  of  the  Supreme  Court.  § 3704.  If  found  proper,  he  re- 
cords them  and  returns  a certified  copy  which  is  recorded  in  the  office 
of  the  clerk  of  the  town  in  which  the  principal  place  of  business  is 
to  be  located.  § 3706. 

4.  Organization. 

First  Meetings.  First  meeting  of  stockholders  may  be  called  by 
any  three  of  the  associates  by  notice  served  personally  or  by  mail  at 
least  seven  days  before  the  meeting.  But  notice  may  be  waived  if  all 
are  present  or  agree  thereto  in  writing  as  shown  by  the  records. 
§ 3708.  A temporary  clerk  is  chosen  by  ballot,  by-laws  are'  adopted, 
and  election  of  a permanent  clerk  and  of  directors,  and  any  other 
officers  to  be  elected  by  the  stockholders  is  proceeded  with  in  ac- 
cordance with  the  by-laws.  § 3709. 

By-Laws.  May  be  adopted  at  the  first  meeting  or  adjournment 
thereof,  to  fix  times  and  places  of  meetings  and  manner  of  calling  and 
conducting  same;  regulating  the  number  of  officers,  the  manner  of 
choosing  them,  their  tenure  of  office,  and  their  powers  and  duties. 
§ 3710.  By-laws  should  provide  for  the  manner  of  levying  assess- 
ments on  stock  and  sale  of  shares  for  non-payment.  § 3691. 

Certificates.  Before  the  corporation  may  commence  business  a 
certificate  of  capital  actually  paid  in  must  be  sworn  to  by  the  presi- 
dent or  clerk  and  directors,  and  be  filed  in  the  office  of  the  Secretary 
of  State,  and  a certified  copy  thereof  in  the  office  of  the  town  clerk 
where  corporation  is  located.  §§  3678,  3722.  Within  ten  days  after 
organization  the  corporation  must  file  annual  license  tax  return  and 
pay  proportionate  license  tax  for  the  unexpired  portion  of  the  year 


VERMONT. 


407 


commencing  February  1st  next  preceding,  each  fraction  of  a month 
being  treated  as  a whole  month.  L.  1902,  Ch.  20,  § 51- 

5.  Corporate  Existence. 

When  Commenced.  On  recording  of  articles  of  association  with 
payment  of  fees.  § 3706.  It  is  perpetual,  unless  limited  by  charter. 
§ 3719.  Continues  three  years  after  expiration  or  annulment  for  the 
purpose  of  winding  up  affairs.  § 3699. 

Beginning  Business.  May  not  be  commenced  until  the  president 
or  clerk  and  directors  shall  make  a certificate  under  oath  stating  the 
amount  of  capital  actually  paid  in  (§§  3678,  372 2),  and  one-fourth  of 
the  capital  stock  must  be  paid  in  cash  or  property  before  the  company 
contracts  debts.  § 3724. 

Renewal.  No  provisions  for  renewal,  the  law  contemplating  per- 
petual existence.  § 3719. 

Forfeiture  of  Charter.  Is  decreed  on  failure  to  pay  annual  license 
tax.  L.  1902,  Ch.  20,  §56;  L.  1904,  Ch.  90. 

Dissolution.  May  be  voted  at  any  legal  meeting  called  for  that 
purpose,  and  is  then  accomplished  by  application  to  court  (§§  3735- 
3742),  and  filing  of  certified  copy  of  decree  in  office  of  Secretary  of 
State.  § 3739-  Voluntary  dissolution  to  avoid  payment  of  annual 
license  tax  may  be  effected  by  filing  with  Secretary  of  State  and  Com- 
missioner of  State  Taxes  a statement  sworn  to  by  the  secretary  and 
treasurer  or  any  two  directors,  stating  that  all  debts  have  been  paid 
and  that  the  corporation  owns  no  property  in  the  State.  L.  1902,  Ch. 
20,  § 57- 


6.  Corporate  Powers. 

General.  General  powers  are  enumerated.  §§  3719-3721. 

To  Hold  Property.  This  power  is  granted  to  the  extent  of  prop- 
erty necessary  for  corporate  purposes  and  that  taken  in  payment  of 
debts.  § 3720.  Property  in  excess  thereof  must  be  sold  within  five 
years  after  acquiring  same.  § 3721. 

Its  Own  Stock.  The  corporation  has  a lien  on  the 
shares  of  stockholders  for  debts  owing  by  them.  § 3727. 

Stock  of  Other  Corporations.  No  special  provisions. 

To  Borrow  Money.  No  debts  may  be  contracted  until  one-fourth 
of  the  capital  is  paid  in,  nor  may  they  at  any  time  exceed  in  amount 
two-thirds  of  the  capital  stock  actually  paid  in.  § 3724.  This  applies 
only  to  corporations  organized  under  general  law.  E.  E.  Rice  Co.  v. 
Kennedy,  76  Vt.  380;  Buck  v.  Troy,  etc.  Co.,  76  Vt.  75. 

To  Do  Business  in  Other  States.  No  direct  provision.  The  re- 
quirement that  the  clerk’s  office  with  all  records  is  to  be  maintained 
in  the  State  (§§  3680,  3712)  and  at  least  two  directors  must  be  resi- 
dents (§  37i7)>  contains  an  implied  permission. 


4o8 


CLASSIFIED  CORPORATION  LAWS. 


Consolidation  or  Merger.  No  provisions. 

Amendment  of  Charter.  Is  provided  for  only  under  special  sub- 
jects, such  as  increase  or  decrease  of  capital  stock,  change  of  name, 
and  change  of  domicile;  two-thirds  vote  required  for  each,  and  filing 
of  certificate  in  the  same  manner  as  of  original  articles.  §§  3729-3731, 
3734;  L.  1898,  Ch.  68.  In  same  manner  but  by  unanimous  vote,  the 
business  set  forth  in  the  articles  of  association  may  also  be  added  to 
or  changed.  L.  1904,  Ch.  89. 

7.  Capital  Stock. 

Amount.  Must  be  not  less  than  $500  nor  more  than  $1,000,000. 

§ 3728. 

Initial  Payment.  Must  be  one-fourth  of  the  amount  of  the  capital 
stock.  § 3724. 

Consideration  for  Issue.  May  be  money  or  property  necessary 
for  the  corporate  business,  and  stock  so  issued  shall  be  full  paid  stock 
and  not  liable  to  further  call.  § 3724. 

Thirty  days’  notice  of  opening  subscription  books  is  published. 
§ 3690.  Manner  of  levying  and  enforcing  assessments  is  to  be  pro- 
vided for  in  by-laws  (§  3691),  except  that  sales  shall  be  made  at  the 
office  of  the  clerk  of  the  corporation  in  the  State,  on  three  weeks’ 
publication  in  a daily  or  weekly  newspaper.  § 3692. 

Increase  or  Decrease.  If  a corporation  increases  its  capital  stock, 
a certificate  thereof  signed  and  sworn  to  by  the  president  and  clerk, 
must  be  filed  with  the  Secretary  of  State  and  recorded,  and  a certi- 
fied copy  is  filed  and  recorded  in  the  town  clerk’s  office.  § 372 9.  Re- 
duction may  be  made  at  a meeting  of  the  stockholders  warned  for  that 
purpose,  by  a two-thirds  vote  of  the  stock.  But  no  reduction  may  be 
had  so  that  the  amount  of  the  corporate  debts  exceed  two-thirds  of 
the  capital  so  reduced,  nor  so  as  to  effect  any  liability.  § 3730.  Cer- 
tificate filed  and  recorded  as  in  case  of  increase.  § 3731- 

Classes  of  Stock.  No  provisions. 

Par  Value  of  Shares.  Must  not  exceed  $100  each.  § 3728. 

Stock  Certificates.  Are  not  prescribed  as  to  form  or  contents. 
Issuance  of  new  certificates  for  lost  ones  is  provided  for  in  detail. 
§§  3696-3698. 

Transfer  of  Stock.  Must  be  made  on  the  corporation  books. 
§§  3688,  3689. 

8.  Stockholders. 

Rights  and  Powers.  The  stockholders  have  the  usual  powers,  in- 
cluding the  adoption  of  by-laws  (§  3710)  and  amendments  of  charter 
by  two-thirds  vote.  §§  3729-373C  3734-  One-twentieth  of  the  stock 
may  compel  meetings.  § 3711. 


VERMONT. 


409 


Liability.  The  stockholders  are  liable  for  corporate  debts  to  the 
extent  of  the  amount  unpaid  on  their  stock.  § 3725 : Dauchy  v.  Brown, 
24  Vt.  197.  Also  for  capital  stock  improperly  withdrawn.  § 3726. 

Meetings.  The  time,  place  and  manner  of  calling  and  conduct- 
ing meetings  are  to  be  regulated  by  the  by-laws.  § 3710.  If  annual 
meeting  is  not  held  regularly,  one-twentieth  of  the  issued  stock  may 
apply  in  writing  to  justice  of  the  peace  for  warrant  to  call  same. 
§ 3711.  A majority  of  the  stock  is  a quorum,  and  each  share  entitles 
the  holder  to  a vote,  which  may  be  cast  in  person  or  by  written  proxy 
duly  filed  with  the  clerk.  § 37 18. 


9.  Directors. 

Number.  Must  be  not  less  than  three.  § 3717. 

Qualifications.  Directors  must  be  stockholders  (§  3677)  and  at 
least  twro  must  be  residents  of  the  State.  § 3717- 

Powers.  They  have  the  usual  powders.  § 3717-  They  may  fill  a 
vacancy  in  the  office  of  the  clerk  of  the  corporation  until  next  elec- 
tion. § 3712.  So  also  any  vacancies  in  the  board.  § 3717- 

Liability.  For  declaring  and  pa\Ting  dividends  when  companj-  is 
insolvent  or  which  render  it  insolvent,  assenting  directors  are  jointly 
and  severally  liable  for  corporate  debts  due  at  the  time  such  dividend 
is  made.  § 3723.  For  permitting  corporate  debts  to  exceed  two- 
thirds  of  the  capital  stock  actually  paid  in,  the  assenting  directors  are 
liable  for  such  excess.  § 3724;  Davenport  v.  Xewton,  42  Atl.  1087. 
(See  “Liability,”  under  § 10.) 

Meetings.  To  be  regulated  by  by-laws.  § 3710-  A majority  is  a 
quorum.  § 3718. 

Executive  Committee.  May  be  provided  for  in  by-laws.  Roeb- 
ling’s  Son  v.  Barre,  76  Vt.  131. 

10.  Officers. 

General.  A president  is  to  be  elected  by  the  directors  out  of  their 
number.  § 3717.  A clerk  must  be  elected  annually  by  the  stock- 
holders, unless  otherwise  prescribed  by  the  by-laws,  who  must  be 
an  inhabitant  of  the  State  and  keep  his  office  therein.  § 3712.  He  is 
to  record  all  votes  of  stockholders  or  members  and  directors  and  all 
proceedings,  and  is  to  keep  records  of  all  instruments  and  papers. 
§ 371.3-  “Clerk”  is  defined  to  mean  secretary  or  any  recording  officer. 
§ 3676-  (See  also  “Corporate  Books,”  § 12.)  A treasurer  is  prescribed 
for  moneyed  corporations.  § 3684.  There  is  a penalty  of  $50  for 
neglecting  to  have  a clerk  in  the  State  for  a period  of  six  months. 
§ 3680.  Xo  officer  of  a private  corporation  shall  receive  a salary  un- 
less the  same  is  voted  and  the  amount  thereof  fixed  by  the  directors. 

§ 3685. 


Liability.  Any  officer  refusing  or  neglecting  for  three  days  after 
any  proper  demand,  and  tender  of  fees  therefor,  to  furnish  certified 


4io 


CLASSIFIED  CORPORATION  LAWS. 


copy  of  any  record,  account  or  paper  in  his  custody,  is  liable  in  fine 
not  exceeding  $1,000.  § 3716.  There  is  also  a penalty  laid  on  the 

clerk  for  refusing  to  exhibit  by-laws  or  records,  of  $10  for  every 
twenty-four  hours  of  continued  refusal.  §§  3681,  3682.  For  debts 
contracted  before  filing  certificate  of  payment  of  capital  stock,  the 
president  and  directors  become  personally  liable.  § 3722.  For  re- 
fusing to  make  tax  returns  there  is  a fine  not  exceeding  $5,000.  §§  382, 

384. 


11.  Principal  Office. 

Every  corporation  must  have  a clerk  who  must  be  and  continue 
a resident  of  the  State  and  keep  his  office  therein.  §§  3712,  3733,  3680. 
Location  may  be  changed  by  procedure  as  on  change  of  name,  a certi- 
fied copy  of  the  articles  of  association  and  of  the  certificate  of  vote 
to  be  recorded  in  the  town  clerk’s  office  of  the  town  to  which  the 
corporation  removes.  L.  1898,  Ch.  68. 

12.  Corporate  Books. 

What  Required.  By-laws  and  records  are  to  be  kept  by  the 
clerk  (§  3681)  of  all  corporate  action  (§  3683),  votes  and  proceedings 
of  stockholders  or  members  and  directors,  or  other  officers;  of  all 
instruments  and  papers  (§  3713);  also  of  all  shares  of  capital  stock 
by  number,  and  of  the  names  of  owners,  with  number  and  designa- 
tion of  shares  held  by  each.  § 3683.  A stock  book  is  further  pre- 
scribed, to  contain  a record  of  the  articles  of  association,  names  of 
stockholders,  places  of  residence,  number  of  shares  held  by  each, 
amount  actually  paid  on  each,  time  of  acquiring  same,  and  transfers. 
§ 3733- 

Where  Kept.  In  the  custody  of  the  clerk  at  his  office  in  the 
State.  §§  3680,  3681,  3712,  3713,  3733- 

Examination  of.  The  by-laws  and  corporate  records  must  be 
exhibited  to  stockholders  at  reasonable  times  and  certified  copies 
furnished  on  request,  with  tender  of  reasonable  compensation,  under 
penalties  for  refusal.  §§  3681,  3682,  3714-3716,  3733.  (See  “Liability,” 
under  § 10.)  Agent  or  attorney  of  stockholder  may  demand  examina- 
tion. § 3681.  Stock  book  must  be  open  during  usual  business  hours. 
§ 3733- 

13.  Reports. 

Returns  for  annual  license  tax  are  prepared  in  triplicate  on  forms 
furnished  by  Tax  Commissioner  and  are  filed  on  or  before  March  1st 
of  each  year,  one  copy  with  State  Treasurer  and  one  with  State  Tax 
Commissioner,  one  copy  being  retained  by  corporation.  L.  1902,  Ch. 
20,  §§  3-5;  L.  1904,  Ch.  29,  § 1.  Other  tax  returns  are  required  to  be 
filed  on  or  before  April  15th  of  each  year  with  the  clerk  of  each  town 
in  which  any  shareholders  reside,  containing  a list  of  such  share- 
holders, with  the  number  of  shares  standing  in  their  names  respec- 
tively as  of  April  1st,  and  the  amount  paid  in  on  each  share.  Also 
a list  of  all  the  shareholders,  with  the  same  facts,  with  the  clerk  of 


VERMONT. 


41 1 


the  town  in  which  the  principal  place  of  business  is  located.  § 380. 
Penalty  for  not  filing  tax  returns  is  fine  of  not  more  than  $5,000. 

§ 384- 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  foreign  corporation  (ex- 
cept railroad  and  insurance  companies  which  are  under  different  regu- 
lations) shall  do  business  in  the  State  without  first  procuring  from 
the  Secretary  of  State  a certificate  that  it  has  complied  with  the  re- 
quirements of  the  law  (L.  1902,  Ch.  20,  § 59);  and  before  such  cer- 
tificate is  granted  it  must  file  in  the  office  of  the  Secretary  of  State 
and  of  the  Commissioner  of  State  Taxes  a sworn  copy  in  the  Eng- 
lish language  of  its  charter  or  certificate  of  incorporation,  and  a 
statement  under  its  corporate  seal,  setting  forth  the  business  it  is 
engaged  in,  or  which  it  proposes  to  carry  on  in  the  State,  and  the 
place  within  the  State  which  is  to  be  its  principal  place  of  business, 
with  a person  residing  in  the  State  on  whom  process  may  be  served. 
Id.,  § 62.  Within  ten  days  after  the  date  of  its  registration  in  the 
State  it  must  file  its  annual  license  tax  returns,  and  pay  the  pro  rata 
share  of  such  tax  for  the  unexpired  portion  of  the  then  current  year. 
Id.,  § 52.  Also  a fee  of  $2  to  Secretary  of  State  and  to  Commissioner 
of  State  Taxes.  Id.,  § 64. 

Penalties  for  Non-Compliance.  Inability  to  sue  in  the  State  on 
any  contract  made  therein,  and  service  may  be  made  against  it  on 
the  Secretary  of  State.  L.  1902,  Ch.  20,  §§  61,  63.  By  non-payment  of 
annual  license  tax  by  May  1st,  it  forfeits  its  right  to  sue  in  the  State 
(Id.,  § 55),  and  may  be  enjoined  from  doing  business  and  its  right  to 
do  so  annulled.  L.  1904,  Ch.  29,  §§  16-19. 

Taxation.  Same  annual  license  tax  is  paid  as  by  domestic  cor- 
porations. L.  1902,  Ch.  20,  § 47. 

Books.  No  provisions. 

Reports.  Same  tax  returns  as  required  of  domestic  corporations. 
L.  1902,  Ch.  20,  §§  3-5. 


Attachments  Against.  No  special  provisions. 

15.  Combinations  and  Monopolies. 

No  provisions. 


VIRGINIA. 


1.  Corporation  Laws.* 

Constitution.  (1902.)  Corporations  may  be  created  only  under 
general  laws.  § 154.  State  Corporation  Commission  provided  for 
(§  155),  to  control  issue  of  charters;  also  licensing  of  foreign  corpora- 
tions. § 156a.  Annual  registration  fee  for  both  foreign  and  domestic 
corporations  to  be  fixed  at  not  less  than  $5  nor  more  than  $25,  and 
failure  to  pay  same  or  to  make  annual  report  for  two  successive  years 
to  operate  as  forfeiture  of  charter  ninety  days  after  end  of  second 
year.  § 157.  Tax  may  be  imposed  on  franchises,  in  which  case,  and 
whenever  all  the  capital  of  a corporation  shall  be  taxed,  its  shares 
shall  be  exempt.  § 170.  Laws  to  be  enacted  preventing  all  trusts, 
combinations  and  monopolies,  inimical  to  public  welfare.  § 165.  Issue 
of  stock  and  bonds  to  be  regulated  by  legislature  and  statement  of 
the  plan  of  issue  in  every  case  to  be  filed  with  State  Corporation  Com- 
mission. § 167. 

Statutes.  The  general  corporation  law  is  contained  in  the  Laws 
of  1902-3-4,  Ch.  270.  Of  this  Act,  Sub-chapters  I and  V contain  gen- 
eral provisions,  Sub-chapter  II  treats  of  railroad  companies,  Sub- 
chapter III  of  telegraph,  telephone,  canal,  turnpike  and  similar  cor- 
porations, and  Sub-chapter  IV  of  educational,  literary,  cemetery  and 
other  corporations  of  the  same  class.  Foreign  corporations  are  pro- 
vided for  by  Chapter  242;  taxation  and  fees  by  Chapter  148;  while  the 
exercise  of  the  power  of  eminent  domain  and  public  service  corpora- 
tions are  regulated  by  Chapters  608,  609.  Chapter  147  provides  for 
State  Corporation  Commission. 

Under  the  general  provisions  corporations  may  be  formed  for 
any  lawful  business  not  involving  the  exercise  of  the  power  of  eminent 
domain.  § 1. 

2.  Taxes  and  Fees. 

Organization  Expenses.  Fees  paid  into  the  State  Treasury,  on 
obtaining  charter:  On  capital  stock  of  $50,000  or  less,  $10;  over 

$50,000  and  less  than  $1,000,000,  20  cents  for  each  $1,000  or  fraction; 
$1,000,000  or  more,  $600.  Ch.  148,  § 38. 

Secretary  of  State  and  clerks  of  courts  are  to  receive  double  the 
amount  of  fees  required  for  similar  service  in  regard  to  deeds.  Sub- 
ch.  V,  § 56.  Under  this  provision  fees  are  as  follows:  For  recording 

each  page  of  application,  certificate  or  articles  of  association,  50  cents; 

* References,  unless  otherwise  stated,  are  to  Virginia  Laws,  1902-3-4,  and  to 
Chapter  270  when  chapter  is  not  specified. 


412 


VIRGINIA.* 

Enactments  of  1906. 


2.  Taxes  and  Fees. 

Registration  Fee.  Section  41  of  Chapter  148,  Laws  of  1903,  is 
amended  by  the  addition  of  a provision  that  the  Clerk  of  the  Stock 
Corporation  Commission  shall,  on  or  before  February  15th  of  each 
year,  send  certified  copy  of  corporation  assessments  to  the  Auditor 
of  Public  Accounts  and  to  each  corporation  assessed.  The  require- 
ment that  certificate  of  registration  must  be  given  to  the  corporation 
upon  paying  its  registration  fee,  is  omitted.  L.  1906,  Ch.  294,  p.  516. 

5.  Corporate  Existence. 

Dissolution.  Section  30  of  Sub-ch.  V is  amended  by  the  omission 
of  the  requirement  that  a meeting  for  dissolution  must  be  held  between 
10  A.  M.  and  3 P.  M.  of  the  day  named.  The  provisions  of  the 
statutes  as  to  dissolution  are  also  extended  to  any  corporation  organ- 
ized under  act  or  under  any  charter  granted  by  any  court  or  by  the 
present  assembly.  Existence  after  expiration  by  limitation  or  disso- 
lution is  to  continue  for  such  time,  not  exceeding  three  years,  as  may 
be  necessary  to  enable  directors  to  close  up  corporate  affairs.  Cor- 
poration so  dissolved  may  be  revived  by  prescribed  procedure  at  any 
time  within  three  years,  if  not  in  the  hands  of  a receiver  or  disabled 
by  disposition  of  essential  property.  L.  1906,  Ch.  327,  p.  576. 

8.  Stockholders. 

Meetings.  Section  7 of  Sub-ch.  V is  amended  as  follows:  In  all 

cases,  unless  other  notice  be  provided  in  the  charter,  etc.,  or  by  the 
stockholders  in  meeting,  or  by  some  provision  of  this  act,  notice  in 
writing  of  the  time  and  place  of  such  meeting,  whether  annual  or  not, 
shall  be  given  to  each  stockholder  in  person,  or  by  publication  at 
least  six  times  a w^eek  for  two  successive  weeks,  or  once  a week  for 
four  successive  weeks.  L.  1906,  Ch.  17,  p.  13. 

13.  Reports. 

Annual  Report.  Section  39  of  Sub-ch.  V is  amended  as  follows: 
The  annual  report  must  be  signed  by  president  or  one  of  the  vice- 
presidents  and  the  secretary  and  must  be  filed  within  thirty  days  after 
the  time  appointed  for  the  annual  meeting.  L.  1906,  Ch.  17,  p.  13. 

14.  Foreign  Corporations. 

Taxation.!  Foreign  corporations  pay  the  same  corporation  fees 
* References,  unless  otherwise  stated,  are  to  Chapter  270  of  Virginia  Laws,  1903. 

t The  above  correction  of  the  text  of  Overland’s  Classified  Laws  is  made 
through  the  courtesy  of  Hon.  Beverley  T.  Crump,  Chairman  of  the  State  Corpora- 
tion Commission  of  Virginia. 


VIRGINIA. 


as  domestic  corporations  but  do  not  pay  the  franchise  tax  (see  text 
Overland’s  Classified  Laws,  pv.421)  which  is  assessed  against  domestic 
corporations  only.  The  special  franchise  taxes  or  occupation  taxes 
referred  to  in  the  text  (p-.  421)  are  assessed  on  particular  businesses 
and  apply  to  foreign  and  domestic  corporations  alike,  if  engaged  in  the 
particular  business  to  which  the  taxes  pertain. 


VIRGINIA. 


413 


minimum  fee,  $1.50;  for  certificate  of  record,  $1.50.  Ch.  503.  A fee 
of  $1  is  also  payable  to  the  Clerk  of  the  State  Corporation  Commis- 
sion for  affixing  seal  to  the  order  of  the  Commission.  To  clerks  of 
courts  on  filing  power  of  attorney,  25  cents.  Sub-ch.  V,  § 14. 

Franchise  Tax.  Payable  on  or  before  March  1st  of  each  year: 
On  maximum  capital  stock  of  $25,000  or  under,  $10;  over  $25,000  and 
not  exceeding  $50,000,  $20;  over  $50,000  and  not  exceeding  $100,000, 
$40;  over  $100,000  and  not  exceeding  $300,000,  $60;  over  $300,000  and 
not  exceeding  $500,000,  $100;  over  $500,000  and  not  exceeding  $1,000,- 
000,  $200;  over  $1,000,000,  $10  for  each  $100,000  or  fraction  of  excess. 
If  franchise  tax  is  not  paid  by  March  1st,  a penalty  of-  five  per  cent, 
is  added.  Ch.  148,  § 43. 

Registration  Fee.  In  addition  to  the  franchise  tax  a registration 
fee  is  imposed,  payable  on  or  before  March  1st  of  each  year,  as  fol- 
lows: On  maximum  capital  stock  of  $15,000  or  under,  $5;  from  $15,- 
000  to  $50,000,  $10;  from  $50,000  to  $100,000,  $15;  from  $100,000  to 
$300,000,  $20;  over  $300,000,  $25.  Ch.  148,  § 41;  Const.,  § 157.  Failure 
to  pay  registration  fee  for  two  years  acts  ninety  davs  thereafter  as  a 
revocation  of  charter. 

Local  Taxation.  As  for  individuals.  Shares  of  stock  are  not 
taxed,  when  all  the  corporate  property  and  capital  are  taxed.  Ch.  148, 
§§  2,  7,  146;  Const.,  § 170. 

General.  On  increase  of  capital  stock  and  on  extension  of  char- 
ter same  fee  is  paid  as  on  original  incorporation,  but  if  no  fee  was 
paid  on  incorporation  the  fee  is  computed  on  the  full  maximum  shown 
by  the  amended  charter.  Ch.  148,  § 39. 


3.  Incorporation. 

Incorporators.  Must  be  not  less  than  three.  Sub-ch.  I,  § 1.  No 
requirements  as  to  residence.  Any  incorporator  may  assign  his  in- 
terest in  or  rights  under  the  charter.  Sub-ch.  V,  § 6. 

Formation. 

1.  Certificate  of  Incorporation.  Must  be  signed  and  ac- 
knowledged by  the  incorporators,  within  or  without  the  State 
(Sub-ch.  V,  § 48),  before  an  officer  authorized  by  the  laws  of  Vir- 
ginia to  take  acknowledgments  (Sub-ch.  I,  § 3)  and  must  set 
forth  (Id.,  § 2): 

(1)  Name  of  the  corporation,  which  must  contain  the 
word  “corporation”  or  “incorporated,”  and  be  such  as  to  dis- 
tinguish it  from  that  of  any  other  corporation  engaged  in  a 
similar  business. 

(2)  Location  of  its  principal  office  in  the  State. 

(3)  Purposes  for  which  it  is  to  be  formed. 


414 


CLASSIFIED  CORPORATION  LAWS. 


(4)  Maximum  and  minimum  amount  of  the  capital  stock 
and  its  division  into  shares;  if  there  be  more  than  one  class 
of  stock,  a description  of  each  with  the  terms  of  creation. 

(5)  Period,  if  any,  limited  for  its  duration. 

(6)  Names  and  residences  of  the  officers  and  directors, 
who  unless  sooner  changed  by  the  stockholders,  are  to  man- 
age the  corporate  affairs  for  the  first  year. 

(7)  Amount  of  real  estate  to  which  its  holdings  at  any 
time  are  to  be  limited. 

(8)  Any  other  provisions,  not  inconsistent  with  the  Act. 
The  statutes  specifically  authorize  provisions  for  cumulative 
voting  (Sub-ch.  V,  § 19),  and  giving  bondholders  right  to 
vote.  Id.,  § 29. 

2.  Presentation  to  Local  Judge.  The  certificate  of  incorpor- 
ation is  first  presented  to  a judge  of  the  circuit  court  of  the 
county,  or  of  the  circuit,  or  of  the  corporation  or  chancery  court 
of  the  city  in  which  the  principal  office  is  to  be  located,  and  if 
approved  as  to  signature  and  acknowledgment,  such  judge  en- 
dorses thereon  his  certificate  that  it  complies  with  the  law. 

3.  Presentation  to  State  Corporation  Commission.  There- 
after, and  on  payment  of  the  prescribed  fee,  the  certificate  is  pre- 
sented, with  the  receipt  for  the  fee,  to  the  State  Corporation 
Commission,  which  may  issue  or  refuse  the  charter. 

4.  Filing  and  Recording.  If  issued,  the  certificate  with  all 
endorsements  and  the  order  of  the  Commissioners  thereon  is 
certified  by  the  Commission  to  the  Secretary  of  the  Common- 
wealth, who  records  it  and  thereupon  certifies  the  same  to  the 
clerk  of  the  circuit  court  of  the  county,  or  of  the  corporation 
court  of  the  city  in  which  the  principal  office  is  located,  or  of 
the  clerk  of  chancery  court  of  the  city  of  Richmond  if  the  princi- 
pal office  is  located  there,  and  it  is  recorded  by  such  clerk,  who 
also  certifies  on  it  the  fact  of  such  recordation  and  returns  it  to 
the  clerk  of  the  State  Corporation  Commission,  who  keeps  it  on 
file.  Sub-ch.  I,  §3. 

4.  Organization. 

First  Meetings.  Until  organization,  the  signers  of  the  certificate 
of  incorporation  manage  the  affairs  of  the  company  and  may  in 
person  or  by  proxy  obtain  subscriptions.  They  must  give  ten  days’ 
notice  of  organization  meeting  unless  stockholders  are  all  present  or 
waive  such  notice  by  unanimous  written  consent.  Sub-ch.  I,  § 4. 
Meeting  must  be  held  in  State.  Sub-ch.  V,  § 7.  No  provisions  as 
to  first  meeting  of  directors. 

By-Laws.  May  be  adopted  by  the  stockholders  or  the  power 
may  be  delegated  to  the  directors  by  the  charter  or  resolution  of  the 
stockholders,  in  which  case  the  by-laws  are  subject  to  amendment 


VIRGINIA. 


415 


and  repeal  by  the  stockholders.  Sub-ch.  V,  §8.  They  may  provide 
for  number  and  classification  of  directors  and  their  authority  and 
powers,  for  terms  of  office  for  directors  and  officers,  for  certification 
and  transfer  of  stock,  for  calling  and  holding  meetings  of  members, 
and  generally  for  the  government  and  regulation  of  the  corporate 
affairs.  Id.,  § 2g. 

Certificates.  A sworn  statement  of  the  financial  plan  on  which 
stock  and  bonds  are  to  be  issued  must  be  filed  with  the  State  Cor- 
poration Commission  before  issuance  of  either.  Sub-ch.  V,  § 9.  (See 
“ Capital  Stock,”  § 7.)  First  annual  report  must  be  filed  within  thirty 
days  after  first  election.  Sub-ch.  V,  § 39. 

If  all  officers  and  directors  are  non-residents  of  the  city  or  county 
in  which  the  principal  office  in  the  State  is  located,  a practicing  at- 
torney at  law,  residing  in  such  city  or  county,  must  be  appointed  by 
written  power  of  attorney  the  attorney  or  agent  on  whom  process 
may  be  served,  and  such  power  of  attorney,  executed  annually,  is 
recorded  in  the  office  of  the  proper  clerk  of  court.  Ch.  I,  § 14.  For 
failure  to  comply  with  the  provisions  of  this  section  for  sixty  days, 
there  is  a fine  of  from  $50  to  $100  for  each  day  of  continued  default 
thereafter,  and  after  six  months  default,  charter  may  be  forfeited.  Id. 

5.  Corporate  Existence. 

When  Commenced.  As  soon  as  the  certificate  of  incorporation 
is  lodged  with  the  Secretary  of  State  for  recordation.  Sub-ch.  I,  § 3. 
Duration  is  not  limited  by  law  but  may  be  by  the  certificate  of  incor- 
poration. Id.,  § 2.  It  can  not  be  inquired  into  collaterally.  Sub-ch. 
V,  § 27.  It  continues  after  expiration  or  dissolution  for  the  purpose 
of  closing  corporate  affairs.  Id.,  §30. 

Beginning  Business.  May  be  commenced  forthwith  and  must  be 
within  two  years.  Sub-ch.  V,  § 51.  The  minimum  amount  of  capital 
stock  mentioned  in  the  certificate  of  incorporation  must,  however, 
have  been  subscribed.  Sub-ch.  I,  § 4. 

Renewal.  Existence  may  be  perpetual.  Sub-ch.  V,  § 2.  No 
specific  provisions  for  renewal.  Reorganization  is  provided  for  on 
sale  of  property  and  franchises  with  prescribed  procedure.  Id.,  §36. 

Forfeiture  of  Charter.  Occurs  on  wilful  failure  to  commence 
business  in  two  years  and  for  misuse  of  any  essential  corporate  func- 
tion. Sub-ch.  V,  § 51.  Corporate  franchise  may  be  surrendered  be- 
fore the  payment  of  any  part  of  the  capital  stock  or  beginning  of 
business,  by  merely  filing,  a verified  certificate  thereof  in  the  office 
of  the  clerk  of  the  State  'Corporation  Commission.  Sub-ch.  I,  § 12. 
On  failure  or  abandonment  for  three  years  of  the  corporate  purposes, 
the  corporation  may  be  dissolved  and  assets  be  distributed  on  suit 
brought  by  one-fourth  the  capital  stock.  Id.,  § 15.  Forfeiture  occurs 
without  action  ninety  days  after  failure  to  file  report  or  to  pay  annual 
registration  fee  for  two  successive  years.  Ch.  148,  §41;  Const.,  §157. 
Also  on  failure  for  six  months  to  appoint  agent.  Sub-ch.  I,  § 14. 

Dissolution.  May  be  effected  by  two-thirds  vote  or  unanimous 
written  consent  of  the  stockholders.  Procedure  prescribed  in  detail. 


416 


CLASSIFIED  CORPORATION  LAWS. 


Sub-ch.  1,  § II.  The  directors  remain  trustees  after  dissolution  to 
wind  up  affairs,  unless  a receiver  is  appointed  by  the  proper  court  on 
application  of  any  creditor  or  stockholder.  Sub-ch.  V,  §§  31-34. 

6.  Corporate  Powers. 

General.  Powers  of  broad  scope  are  enumerated.  Sub-ch.  V,  § 2. 

To  Hold  Property.  This  power  is  given  to  the  extent  of  such 
real  and  personal  estate  as  the  purposes  of  the  corporation  shall  re- 
quire and  such  other  re?.l  estate  as  may  be  taken  in  satisfaction  of 
debts.  Sub-ch.  V,  § 2.  The  amount  of  its  real  estate  holdings  at  any 
time  are  to  be  stated  and  limited  by  the  certificate  of  incorporation. 
Sub-ch.  I,  § 2. 

Its  Own  Stock.  On  non-payment  of  assessment  and 
no  bidder  being  found  at  public  sale,  stock  is  forfeited  to  the  cor- 
poration. Sub-ch.  V,  § 28.  Shares  of  stock  of  a corporation  belong- 
ing to  it  shall  not  be  voted  directly  or  indirectly.  Id.,  § 23. 

Stock  of  Other  Corporations.  This  is  permitted  if  au- 
thorized in  the  certificate  of  incorporation.  Sub-ch.  V,  § 2h. 

To  Borrow  Money.  Bonded  indebtedness  may  be  created  or  in- 
creased only  by  vote  of  majority  of  the  stockholders,  in  person  or  by 
proxy,  at  a meeting  held  on  notice  as  prescribed  for  amendments. 
Sub-ch.  V,  §§  2e,  4.  Bondholders  may  be  given  the  right  to  vote  by 
the  certificate  of  incorporation,  and  any  such  right  must  not  be  sub- 
sequently impaired.  ' In  case  of  default  on  the  bonds,  holders  may 
also  be  given  the  same  right  of  inspection  of  books,  accounts  and 
records  as  stockholders  have  and  any  other  rights.  Sub-ch.  V,  § 29. 

To  Do  Business  in  Other  States.  This  is  permitted  (Sub-ch.  V, 
§ 5),  and  is  facilitated  by  the  provisions  of  the  statutes.  Id.,  §§  48,  49. 
A principal  office  must,  however,  be  maintained  within  the  State  with 
an  agent  therein  on  whom  process  may  be  served.  Sub-ch.  I,  § 14; 
Sub-ch.  V,  § 5.  It  should  be  noted  that  when  all  officers  and  -directors 
are  non-residents  of  the  city  or  county  in  which  principal  office  is 
located,  a failure  for  six  months  to  file  annual  certificate  pf  election, 
with  power  of  attorney  to  resident  attorney,  renders  charter  liable 
to  annulment  by  quo  warranto.  Sub-ch.  I,  § 14. 

Consolidation  or  Merger.  Between  railroad  corporations  and 
other  corporations  exercising  the  right  of  eminent  domain,  is  specially 
provided  for.  Sub-ch.  II,  § 2.  Between  ordinary  corporations  en- 
gaged in  similar  business,  consolidations  may  be  had  by  the  usual 
proceedings,  as  modified  by  the  specific  regulations  of  the  State  con- 
cerning notice,  filing  and  recording.  Sub-ch.  V,  §§  40-46. 

Amendment  of  Charter.  May  be  had  by  application  of  the  in- 
corporators before  amount  fixed  by  charter  as  minimum  capital  has 
been  subscribed,  by  a supplemental  certificate  accompanied  by  receipt 
for  proper  fee,  if  any,  and  executed,  certified  and  recorded  in  the 
same  manner  as  the  original  certificate.  Sub-ch.  I,  § 5.  After  sub- 
scription but  before  complete  organization,  application  must  be  made 
to  the  State  Corporation  Commission  by  the  subscribers  and  regular 
amendment  fees  paid.  Id.,  § 6. 


VIRGINIA. 


417 


After  organization,  amendments  may  be  effected  for  any  purpose 
that  might  have  been  attained  in  the  original  certificate  of  incorpora- 
tion, except  change  of  capital  stock,  by  a two-thirds  vote  of  each  class 
of  stock,  at  a meeting  called  on  resolution  of  the  directors,  on  notice 
stating  the  object,  time  and  place,  published  six  times  a week  for  two 
successive  weeks  prior  to  the  meeting,  in  or  near  the  place  where  the 
principal  office  is  located,  or  served  personally,  or  by  mail  at  least 
ten  days  before  the  meeting.  Certificate  of  the  amendment  is  executed 
by  the  president  or  a vice-president,  under  the  corporate  seal,  attested 
by  the  secretary,  and  presented  to  the  State  Corporation  Commission, 
with  receipt  for  the  fee,  if  any,  prescribed  for  such  amendment,  and  if 
allowed  by  the  Commission,  it  is  certified  and  recorded  in  the  same 
manner  as  the  original  certificate.  Sub-ch.  I,  § 7.  (See  “ Increase  or 
Decrease,”  under  § 7.) 

7.  Capital  Stock. 

Amount.  Minimum  and  maximum  limit  is  to  be  stated  in  cer- 
tificate of  incorporation.  Ch.  I,  § 2d. 

Initial  Payment.  Minimum  mentioned  in  the  certificate  of  in- 
corporation must  be  paid  in  before  the  corporation  is  organized  and 
begins  business.  Id. 

Consideration  for  Issue.  Subscriptions  to  the  capital  stock  may 
be  paid  in  money,  land  or  other  property,  leases,  options,  mines,  min- 
erals, mineral  rights,  patent  rights,  rights  of  way,  or  other  rights  or 
easements,  contracts,  labor  or  services;  and  there  shall  be  no  personal 
or  individual  liability  on  any  subscriber  beyond  the  obligation  to 
comply  with  the  terms  he  may  have  agreed  to  in  his  contract  of  sub- 
scription. Any  corporation  may  adopt  such  plan  of  financial  organi- 
zation and  may  dispose  of  its  stock  or  bonds  for  the  purposes  of  its 
incorporation  at  such  prices,  for  such  consideration  and  on  such 
terms  and  conditions  as  it  sees  fit,  provided  that  before  making  any 
issue  of  its  stock  or  bonds  it  shall  file  with  the  State  Corporation 
Commission,  a statement  verified  by  the  president  or  secretary,  set- 
ting forth  fully  and  accurately  the  financial  plan  or  basis  upon  which 
such  stock  or  bonds  are  to  be  issued,  and  where  such  basis  includes 
services  or  property  received  or  to  be  received,  the  statement  must 
accurately  specify  the  same  in  the  manner  prescribed  by  the  Com- 
mission, together  with  the  valuation  thereof.  The  judgment  of  the 
directors  as  to  value  is  conclusive  in  the  absence  of  fraud  participated 
in  by  both  parties  to  the  transaction.  Sub-ch.  V,  § 9.  For  any  viola- 
tion of  these  provisions  there  is  a fine  of  $1,000  to  be  recovered  at  the 
suit  of  the  State  Corporation  Commission.  Id.;  Const.,  § 167. 

On  non-payment  of  any  assessment  properly  made  by  the  direc- 
tors, the  same  may  be  sued  for,  or  sale  of  shares  sufficient  to  pay  same 
may  be  made  on  publishing  notice  three  weeks  once  in  each  week, 
and  twenty  days’  notice  by  mail  to  stockholder.  If  no  bidder  is 
found,  stock  and  all  previous  payments  are  forfeited  to  the  corpora- 
tion. Sub-ch.  V,  § 28,  amended  by  Ch.  555. 

Increase  or  Decrease.  Capital  stock  may  be  increased  or  de- 
creased by  regular  amendment.  Sub-ch.  I,  §§  7,  9.  Certificate  of  de- 
crease must  be  published  once  a week  for  three  weeks,  first  publication 


418 


CLASSIFIED  CORPORATION  LAWS. 


within  fifteen  days  after  recordation,  and  be  posted  at  the  court  house 
door  within  same  time.  No  decrease  to  affect  the  rights  of  creditors. 
Id.,  § io. 

Classes  of  Stock.  May  be  provided  for  in  certificate  of  incorpo- 
ration or  subsequently  by  amendment;  may  be  made  redeemable  at 
any  time  after  three  years  from  issuance,  at  not  less  than  par.  The 
dividend  on  preferred  stock  is  to  be  stated  in  charter  or  amendment 
thereof,  and  may  be  cumulative.  Sub-ch.  V,  § 13. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Are  to  be  signed  by  the  president  and  treasu- 
rer or  by  any  two  officers  authorized  by  the  board  of  directors,  and 
must  certify  the  number  of  shares  owned.  Sub-ch.  V,  § 14.  Full 
provision  is  made  for  the  replacement  of  certificates  lost  or  destroyed. 
Id.,  §§  37,  38. 

Transfer  of  Stock.  Is  to  be  regulated  by  the  by-laws.  Sub-ch. 
V,  § 15.  Transfer  books  are  prescribed.  Id.,  §§  15,  18.  No  stock  shall 
be  transferred  on  the  books  until  all  the  money  payable  thereon  under 
the  subscription  agreement  has  been  paid,  unless  assented  to  by  the 
corporation  in  which  case  the  assignor  shall  be  no  longer  liable,  but 
the  assignee  is  liable  for  any  instalments  accrued  or  thereafter  to 
accrue.  Id.,  § 57. 

8.  Stockholders. 

Rights  and  Powers.  They  have  the  usual  control  of  amendments, 
dissolution,  etc.,  ordinarily  by  two-thirds  vote.  Sub-ch.  I,  §§  7,  9. 
One  stockholder  may  cause  election  to  be  held  by  application  to  judge 
of  the  proper  court,  and  may  also  inquire  into  propriety  or  legality  of 
any  election  by  the  same  means.  Sub-ch.  V,  §§  24,  25. 

Liability.  Stockholders  are  liable  for  unpaid  balance  on  stock, 
according  to  their  subscription  agreements.  Sub-ch.  V,  §§  9,  28.  Lia- 
bility may  be  avoided  by  transfer  of  stock  on  the  books  with  assent 
of  the  corporation.  Id.,  § 57.  For  participating  in  any  dividend  out 
of  the  capital  stock  they  are,  however,  liable  to  creditors  for  the 
amount  received.  Id.,  § 60. 

Meetings.  Are  to  be  regulated  by  the  by-laws.  Annual  meeting 
must  be  held  in  the  State.  Sub-ch.  V,  § 7.  If  election  is  not  held  on 
the  day  fixed,  directors  may  call  election  at  any  time  thereafter,  or  the 
judge  of  the  proper  court  may  call  such  meeting  on  application  of  any 
stockholder.  Id.,  §§  24,  25. 

Notice.  Two  weeks’  publication,  six  times  each  week,  or  four 
weeks’  publication  once  each  week,  is  prescribed,  but  may  be  avoided 
by  unanimous  consent,  or  by  provision  therefor  in  the  charter  or  by- 
laws. Sub-ch.  V,  § 7. 

Voting.  Every  stockholder  is  entitled  to  one  vote  for  each  share 
of  stock  standing  in  his  name  on  the  books  of  the  corporation  unless 
otherwise  provided  by  charter  or  by-laws.  Sub-ch.  V,  § 20.  Cumu- 
lative voting  may  be  provided  for.  Id.,  § 19.  Transfer  books  are  to 
be  closed  not  exceeding  thirty  days  before  elections  (Id.,  § 18),  but 


VIRGINIA. 


419 


the  date  to 
Id.,  § 20. 
Proxies. 


determine  voting  rights  may  be  fixed  by  the  by-laws. 
Voting  may  be  in  person  or  by  proxy.  Sub-ch.  V,  § 16. 


9.  Directors. 

Number.  Directors  of  general  corporations  must  be  not  less  than 
three,  the  number  to  be  fixed  by  the  certificate  of  incorporation. 
Sub-ch.  I,  § 13.  A director  may  be  removed  at  any  meeting  of  the 
stockholders.  Sub-ch.  V,  § 10.  They  may  be  classified  and  elected  in 
rotation;  but  for  no  term  longer  than  five  years  nor  shorter  than  one, 
and  the  term  of  at  least  one  class  must  expire  each  year.  Id.,  § 12. 
By-laws  may  fix  and  alter  number.  Id.,  § 2g. 

Qualifications.  No  statutory  regulations. 

Powers.  Power  to  make  by-laws  may  be  delegated  to  them  sub- 
ject to  amendment  or  repeal  by  the  stockholders.  Sub-ch.  V,  §8. 
They  continue  as  trustees  after  expiration  or  dissolution  (Id.,  §§  31- 
35),  but  court  may  appoint  receiver  on  application  of  any  creditor  or 
stockholder.  Id.,  § 32. 

Liability.  Directors  and  officers  knowingly  giving  out  or  pub- 
lishing any  statement  or  report,  false  in  any  material  respect,  become 
jointly  and  severally  liable  for  any  loss  or  damage  resulting  to  any 
person  or  corporation  therefrom.  Sub-ch.  V,  § 26.  For  declaring  a 
dividend  out  of  the  capital  stock,  the  assenting  directors  are  jointly 
and  severally  liable  to  creditors  for  the  amount  so  divided.  Id.,  § 60. 
Suits  to  enforce  such  liability  must  be  brought  within  two  years  after 
the  right  of  action  accrues.  Id.,  § 35. 

Meetings.  May  be  held  within  or  without  the  State.  Sub-ch.  V, 
§5.  Are  to  be  regulated  by  by-laws.  Id.,  § 2g.  Quorum  is  a major- 
ity. Sub-ch.  I,  § 13. 

Executive  Committee.  May  be  provided  for  by  the  by-laws  or  by 
the  stockholders,  to  consist  of  two  of  the  directors,  and  to  exercise 
the  powers  of  the  board  of  directors  to  the  extent  authorized  by  reso- 
lution or  by-laws.  Sub-ch.  I,  § 13. 

10.  Officers. 

General.  A president  is  prescribed,  who  must  be  a director. 
Sub-ch.  V,  § 10.  Also  one  or  more  vice-presidents,  a secretary  and 
one  or  more  assistant  secretaries,  and  such  other  officers  and  agents 
as  the  charter  may  provide.  Id.,  §§  10,  11.  The  president  is  elected 
by  the  stockholders,  unless  otherwise  provided  by  law  or  by  by-laws. 
Id.,  § 10.  By-laws  are  to  regulate  terms,  compensation,  etc.  Id.,  § 2g. 
If  all  the  officers  and  directors  are  non-residents  of  the  county  or 
city  in  which  the  principal  office  is  located,  a resident  agent  must  be 
appointed  on  whom  process  may  be  served.  Sub-ch.  I,  § 14.  (For 
liability,  see  “ Directors,”  § 9.) 


420 


CLASSIFIED  CORPORATION  LAWS. 


11.  Principal  Office. 

Must  be  maintained  in  the  State  and  must  be  named  in  certificate 
of  incorporation  (Sub-ch.  I,  §2b;  Sub-ch.  V,  §5),  with  an  agent  on 
whom  process  may  be  served.  Sub-ch.  I,  § 14.  Both  are  to  be  stated 
in  annual  report.  Sub-ch.  V,  § 39. 

12.  Corporate  Books. 

What  Required.  A transfer  book  is  specified.  Sub-ch.  V,  § 18. 
A register  of  stockholders’  names  and  addresses  is  to  be  kept  by 
secretary.  Id.,  § 49. 

Where  Kept.  No  provisions. 

Examination  of.  Bondholders  may  be  given  same  right  to  ex- 
amine books  which  stockholders  have  under  the  common  law.  Sub- 
ch.  V,  § 29. 

13.  Reports. 

After  the  first  elections  of  officers  and  directors,  and  thereafter 
within  thirty  days  after  the  time  appointed  for  holding  its  annual 
election,  a report,  verified  by  the  president  or  vice-president  and  sec- 
retary, must  be  filed  in  the  office  of  the  State  Corporation  Commis- 
sion, stating:  (1)  Name  of  the  corporation.  (2)  Location  (county  or 
city,  street  and  number,  if  any)  of  its  principal  office  in  the  State  and 
the  agent  on  whom  process  may  be  served.  (3)  Character  of  the  busi- 
ness. (4)  Amount  of  authorized  capital  stock,  if  any,  and  amount 
actually  issued  and  outstanding.  (5)  Names  and  addresses  of  officers 
and  directors  and  when  their  respective  terms  expire.  (6)  Date,  if 
any,  appointed  for  the  next  annual  meeting  of  stockholders.  A fine 
of  not  less  than  $25  nor  more  than  $100  is  to  be  imposed  and  judgment 
entered  therefor  by  State  Corporation  Commission  for  failure  to  file 
this  report.  Ch.  V,  § 39. 

By  February  1st  of  each  year  the  maximum  capital  stock  must  be 
reported  to  State  Corporation  Commission  as  of  January  1st  preced- 
ing, on  blanks  furnished  by  the  Commission;  and  on  paying  the  regis- 
tration fee,  every  corporation  must  make  a report  of  its  business, 
status  or  condition,  on  blanks  likewise  furnished.  Ch.  148,  § 41. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Every  foreign  corporation  be- 
fore doing  business  in  the  State  must  present  to  the  State  Corporation 
Commission:  (a)  A written  power  of  attorney,  executed  in  duplicate, 
appointing  some  person  resident  of  the  State  its  agent  on  whom 
process  may  be  served;  (b)  two  duly  authenticated  copies  of  its  char- 
ter; (c)  a certificate  of  the  State  Auditor  of  public  accounts  showing 
the  payment  into  the  State  Treasury  of  the  fee  required  by  law; 
whereupon  the  Commission  issues  license  to  do  business  in  the  State. 
An  office  must  be  maintained  in  the  State.  Ch.  242;  Code,  § 1104. 


VIRGINIA. 


421 


Fees  are  the  same  as  the  charter  fees  of  domestic  corporations.  Ch. 
148,  §38. 

Penalties  for  Non-Compliance.  Fine  of  from  $10  to  $1,000,  each 
business  transaction  to  be  considered  a separate  offence.  Officers, 
agents  and  employees  transacting  business  to  be  personally  liable,  and 
to  be  liable  also  for  all  claims  against  their  corporation  held  by  resi- 
dents of  the  State.  Service  of  legal  process  on  any  of  such  officers, 
agent  or  employees  is  legal  service.  Ch.  242;  Code,  § 1105.  Right  to 
do  business  is  also  forfeited  ninety  days  after  failure  to  pay  annual 
registration  fee  and  file  report  for  same  for  two  years.  Ch.  148,  §41; 
Const.,  § 157. 

Taxation.  Foreign  business  corporations  pay  same  annual  regis- 
tration fees  and  franchise  tax  as  domestic  corporations;  the  former 
on  penalty  of  forfeiture  of  right  to  do  business  in  the  State.  Ch.  148, 
§ 41.  There  are  also  numerous  special  franchise  taxes. 

Books.  All  regulations  for  domestic  corporations  apply  to  for- 
eign corporations.  Const.,  § 163. 

Reports.  Same  annual  report  after  election  is  required  as  of  do- 
mestic corporations.  Sub-cli.  V,  § 39.  Also  same  statement  of  maxi- 
mum capital  stock  and  for  registration  fee,  on  penalty  of  fine  from 
$25  to  $100  for  every  thirty  days  of  continued  default.  Ch.  148,  § 41. 

Attachments  Against.  Lie  on  ground  of  being  a foreign  cor- 
poration. Const.,  § 163. 

15.  Combinations  and  Monopolies. 

The  Constitution  of  1902  directs  laws  to  be  enacted  preventing  all 
trusts,  combinations  and  monopolies  inimical  to  public  welfare.  § 165. 
This  provision  has  not  been  carried  into  effect. 


WASHINGTON. 


1.  Corporation  Laws.* 

Constitution.  (1889.)  Corporations  to  be  formed  under  general 
laws,  and  not  by  special  acts.  Art.  XII,  § 1.  Liability  of  stockhold- 
ers, except  of  bank  or  insurance  company,  limited  to  amount  unpaid 
on  their  stock.  Id.,  § 4.  Stock  to  be  issued  only  to  bona  fide  sub- 
scribers or  their  assignees;  and  no  bonds  or  other  obligations  to  be 
issued,  except  for  money  or  property  received  or  labor  done.  Stock 
to  be  increased  only  in  accordance  with  general  laws  and  by  due  con- 
sent of  a majority  of  the  stockholders.  Fictitious  increase  of  stock 
or  indebtedness  void.  Id.,  § 6.  State  interest  or  ownership  in  cor- 
porations prohibited.  Id.,  § 9.  Discrimination  in  rates  by  railroads 
and  consolidation  of  competing  lines  of  railways,  telegraph,  telephone 
and  express  companies  forbidden.  Id.,  §§  13-21.  Trusts  and  monopo- 
lies prohibited.  Id.,  § 22.  Corporations  controlled  by  aliens  not  al- 
lowed to  own  lands  other  than  mineral  deposits.  Art.  II,  § 33. 

Statutes.  The  general  corporation  law  is  contained  in  Ballinger’s 
Annotated  Codes  and  Statutes  of  Washington,  1897,  Title  XXIII, 
Chapter  I.  Under  it  corporations  may  be  formed  for  any  lawful 
trade  or  business.  §4250.  Chapter  II  treats  of  foreign  corporations; 
and  the  remaining  chapters  of  said  title  apply  specially  to  railroad, 
telegraph  and  telephone,  boom,  building  and  loan,  religious,  social 
and  charitable  corporations  and  patrons  of  husbandry.  Amendments 
are  found  in  L.  1899,  1901,  1903  and  1905. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  Incorporation 

fee,  $10  (§4285);  for  recording,  15  cents  per  folio;  for  certified  copy 
of  articles,  $5,  and  15  cents  for  each  folio  over  twenty.  §§  4287,  4288. 
For  certificates  under  seal  of  State,  $2.  L.  1903,  Ch.  151. 

To  County  Auditors:  Filing,  10  cents;  indexing,  5 cents  for  first 
two  names  and  5 cents  for  each  additional  name;  certified  copy,  10 
cents  per  folio;  recording,  15  cents  per  folio,  and  50  cents  for  certifi- 
cate and  seal.  L.  1903,  Ch.  151. 

Franchise  Tax.  The  annual  license  fee  is  $10,  payable  on  or  be- 
fore July  1st.  §4289.'  Penalty  of  $2.50  is  added  if  payment  is  made 
after  that  date  but  before  January  1st  next  following;  penalty  there- 
after is  $5  for  every  day  the  corporation  continues  to  do  business 
without  payment  thereof.  Id. 

* References  are  to  Ballinger’s  Codes  and  Statutes,  1897,  except  where  other- 
wise noted. 


422 


WASHINGTON. 


423 


Local  Taxation.  Same  as  for  individuals.  Realty  is  assessed  bi- 
ennially; personal  property  annually  as  of  March  1st.  § 1660.  Cor- 
porations must  deliver  to  assessor  sworn  statements  setting  forth  the 
name  and  location,  the  real  property  and  where  situated,  and  the 
nature  and  value  of  its  personal  property.  § 1676. 

General.  To  Secretary  of  State:  Filing  fee  for  any  instrument, 
$5,  and  i.S  cents  a folio  for  recording;  certificate  and  seal  of  the  State, 
$2.  On  filing  amendatory  or  supplemental  articles  or  certificate.  of 
increase  or  decrease  of  capital  stock,  $10.  For  filing  and  recording 
trade  mark,  $5.  §4286;  L.  1903,  Ch.  151. 

3.  Incorporation. 

Incorporators.  May  be  any  two  or  more  persons.  §4251.  They 
need  not  be  residents.  Hastings  v.  Anacortes,  etc.  Co.,  29  W.  224. 

Articles  of  Incorporation.  Must  be  subscribed. and  acknowledged 
by  the  incorporators  in  triplicate,  and  must  state  (§4251;  L.  1905, 
Ch.  11): 


(1)  Name  of  the  corporation.  Similarity  of  names  for- 
bidden. L.  1903,  Ch.  84.  May  be  changed  by  filing  supple- 
mental articles  of  incorporation.  L.  1905,  Ch.  109. 

(2)  Objects  for  which  it  is  formed. 

(3)  Amount  of  capital  stock.  No  limitations. 

(4)  Time  of  its  existence,  not  to  exceed  fifty  years. 

(5)  Number  of  shares  of  which  the  capital  stock  shall 
consist. 

t6)  Number  and  names  of  trustees,  to  manage  the  corpor- 
ate affairs  for  such  time  (not  less  than  two  nor  more  than 
six  months)  as  the  certificate  may  designate.  One  trustee 
must  be  resident  of  State.  § 4255. 

(7)  Name  of  city,  town  or  locality  and  county  in  which  the 
principal  place  of  business  is  to  be  located. 

Filing  and  Recording.  One  copy  of  the  articles  of  incorporation 
must  be  recorded  in  the  office  of  the  Secretary  of  State,  and  one  in 
the  office  of  the  auditor  of  the  county  in  which  the  principal  place  of 
business  is  located,  the  third  being  retained  by  the  corporation. 
§4251.  A copy  certified  by  the  county  .auditor  or  by  the  Secretary  of 
State  is  prima  facie  evidence  of  the  facts  stated  therein.  § 4252. 

4.  Organization. 

First  Meetings.  No  provision  as  to  first  meeting  of  stockholders. 
The  first  meeting  of  trustees  for  election  of  officers  must  be  held 
within  thirty  days  after  incorporation.  § 4260.  It  is  called  by  notice 
signed  by  one  or  more  of  the  trustees  named  in  the  certificate,  served 
personally  on  each,  or  published  at  least  twenty  days  in  some  news- 


424 


CLASSIFIED  CORPORATION  LAWS. 


paper  in  the  county  in  which  the  principal  place  of  business  is  located, 
or  if  none  there,  in  a newspaper  nearest  thereto  in  the  State.  § 4258. 

By-Laws.  May  prescribe  notice  of  meetings  (§§  4255,  4276), 
method  of  transferring  stock  (§4261),  regulate  voting  (§4255),  and 
generally  provide  for  the  regulation  of  the  corporate  affairs. 

Certificates.  Within  thirty  days  after  filing  articles  of  incorpora- 
tion with  the  county  auditor,  the  corporation  must  file  with  that 
officer  a statement  sworn  to  by  its  president,  and  attested  by  its  secre- 
tary under  the  corporate  seal,  containing  a list  of  its  officers  with 
their  respective  names,  titles,  addresses,  and  terms  of  office.  § 4260. 

5.  Corporate  Existence. 

When  Commenced.  On  payment  of  fees  and  filing  articles  of 
incorporation  (§§4253,  4285),  and  extends  fifty  years,  unless  a shorter 
period  is  limited  by  articles.  §4251. 

Beginning  Business.  Business  may  not  be  commenced  until  in- 
corporation fees  have  been  paid  (§4285),  nor  until  the  whole  amount 
of  the  capital  stock  has  been  subscribed,  or  for  mining  corporations, 
a majority  of  their  stock.  §4250. 

Renewal.  May  only  be  secured  by  re-incorporation,  as  renewal 
by  amendment  is  expressly  forbidden.  §4251;  L.  1905,  Ch.  11. 

Forfeiture  of  Charter.  Quo  zvarranto  lies  for  usurpation  of  cor- 
porate powers,  and  for  acts  for  omissions  which  amount  to  a surren- 
der or  forfeiture  of  corporate  rights.  §§  5780,  5789,  5790. 

Dissolution.  May  be  had  voluntarily  on  vote  of  two-thirds  of  all 
the  stockholders,  by  publication  of  notice  once  a week  for  eight  weeks 
and  hearing  before  superior  judge  of  the  county  in  which  the  office 
is  located.  If  satisfied  that  the  necessary  preliminary  steps  have  been 
taken  and  all  claims  against  the  corporation  are  discharged,  the  judge 
enters  an  order  declaring  it  dissolved.  § 4275. 

6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  §§  4253,  4254. 

To  Hold  Property.  The  power  “ to  purchase,  hold,  mortgage, 
sell  and  convey  real  and  personal  property  ” is  expressly  given  with- 
out limitation  (§§4253,  4254),  except  as  to  corporations  the  majority 
of  whose  stock  is  held  by  aliens,  which  may  not  hold  land,  except 
mineral  deposits.  Const.,  Art.  II,  §33. 

Its  Own  Stock.  No  provisions. 

Stock  of  Other  Corporations.  The  power  is  granted 
and  corporations  are  further  allowed  “ through  their  duly  authorized 
officers  to  execute  all  and  any  instruments  necessary  to  carry  out  the 
powers  conferred.”  Subscriptions  may  be  made  to  stock  of  other 
corporations.  §4267;  L.  1905,  Ch.  2 7. 


WASHINGTON. 


425 


To  Borrow  Money.  The  power  is  conferred.  §§  4253,  4266.  Cor- 
porate debts  must  not  exceed  the  capital  stock.  §4271. 

To  Do  Business  in  Other  States.  The  power  is  implied.  §4255; 
Hastings  v.  Anacortes,  etc.  Co.,  29  W.  224. 

Consolidation  or  Merger.  Is  prohibited  to  railroad  companies 
owning  competing  lines.  Const.,  Art.  XII,  § 16.  No  provisions  as  to 
general  corporations. 

Amendment  of  Charter.  May  be  effected  by  a majority  vote  of 
the  trustees,  and  vote  or  written  assent  of  two-thirds  of  the  capital 
stock.  The  president  and  secretary  to  certify  the  amendment  in  trip- 
licate under  the  corporate  seal,  and  file  same  as  were  original  articles. 
L.  1905,  Ch.  11.  Special  provisions  apply  to  increase  or  decrease  of 
capital  stock  (§§  4271-4273),  removal  of  principal  office  (§  4276),  and 
change  of  name.  L.  1905,  Ch.  109.  (See  under  § 7,  “ Increase  or  De- 
crease,” and  § 11,  “ Principal  Office.”) 

7.  Capital  Stock. 

Amount.  Is  not  limited  by  law,  but  is  to  be  stated  in  articles  of 
incorporation.  §4251. 

Initial  Payment.  Is  not  prescribed,  but  the  entire  capital  stock 
must  be  subscribed  for  before  beginning  business.  § 4250.  Of  mining 
companies  only  the  greater  portion  is  required  to  be  subscribed. 
§ 4280. 

Consideration  for  Issue.  Must  be  money  or  property  received  or 
labor  done.  Const.,  Art.  XII,' § 6.  As  to  mining  companies,  owners 
of  mining  claims  may  incorporate  without  subscribing  to  stock,  each 
owner  being  deemed  to  have  subscribed  the  amount  of  the  value  of 
his  claim  to  such  capital  stock,  to  date  from  the  execution  and  de- 
livery of  deed  or  other  instrument  conveying  title  to  the  corporation. 
§ 4280;  Campbell  v.  McPhee,  36  W.  593. 

Assessments,  unless  otherwise  prescribed  by  the  by-laws,  may 
be  made  by  the  trustees  in  their  discretion.  Sale  of  delinquent  stock 
to  be  published  at  least  four  weeks.  § 4262. 

Increase  or  Decrease.  May  be  had  on  a vote  of  two-thirds  of  the 
shares  of  stock  at  meeting  held  on  notice  signed  by  a majority  of  the 
trustees,  published  at  least  eight  weeks  in  a newspaper  of  the  county 
in  which  the  principal  place  of  business  is  located,  and  if  none  there, 
in  the  newspaper  nearest  thereto  in  the  State.  § 4272.  Certificate  of  the 
proceedings,  showing  the  amount  of  capital  stock  actually  paid  in, 
the  amount  of  corporate  debts  and  liabilities,  and  the  amount  to 
which  the  corporate  stock  is  to  be  increased  or  diminished,  is  to  be 
signed  and  verified  by  the  chairman  and  secretary  of  the  meeting,  and 
certified  by  majority  of  the  trustees,  and  filed  and  recorded  as  were 
original  articles  of  incorporation.  § 4273.  Before  any  reduction  can 
be  made,  the  amount  of  debts  and  liabilities  must  be  reduced  so  as 
not  to  exceed  the  diminished  amount  of  capital  stock.  § 4271;  Tait  v. 
Pigott,  32  W.  344. 


426 


classified  corporation  laws. 


Classes  of  Stock.  Not  provided  for. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  No  requirements. 

Transfer  of  Stock.  To  be  made  as  prescribed  by  the  by-laws,  but 
no  transfer  to  be  valid  except  as  between  the  parties  thereto,  unless 
entered  on  the  books  of  the  company.  § 4261. 

8.  Stockholders. 

Rights  and  Powers.  They  control  amendments,  increase  and  de- 
crease of  stock,  dissolution,  removal  of  trustees,  etc.,  by  a two-thirds 
vote.  §§  4251,  4253,  4255,  4272,  4275;  L.  1905,  Ch.  11.  Stockholders 
of  mining  companies  holding  stock  to  the  amount  of  one  thousand 
shares  have  special  rights  of  examination  of  the  property  of  the  com- 
pany. L.  1901,  Ch.  120.  The  stockholders  may  prescribe  manner  of 
making  assessments  on  stock.  § 4262. 

Liability.  The  stockholders  are  liable  for  corporate  debts  only 
to  the  extent  of  unpaid  subscriptions.  § 4266;  Const.,  Art.  XII,  § 4. 

Meetings.  To  elect  officers,  must  be  held  within  the  State. 
§ 4255.  Time,  place  within  the  State,  and  manner  of  calling  and  con- 
ducting meetings  are  to  be  prescribed  by  the  by-laws.  Elections  shall 
be  by  ballot,  and  by-laws  may  limit  a stockholder  to  a single  vote,  or 
to  one  vote  for  each  full  paid  share,  or  its  equivalent,  held  by  him. 
Voting  by  proxy  is  permitted.  Id. 

9.  Trustees. 

General.  Directors  may  be  removed  by  two-thirds  vote  of  the 
stockholders  at  meeting  called  as  the  by-laws  may  prescribe.  : § 4255. 

Number.  Must  be  not  less  than  two.  § 4255. 

Qualifications.  Trustees  must  be  stockholders.  One  at  least 
must  be  a resident  of  the  State,  and  a majority  citizens  of  the  United 
States.  They  shall  respectively  take  and  subscribe  an  oath  of  office. 
§ 4255- 

Powers.  They  have  no  unusual  powers.  They  fill  vacancies  in 
board,  except  such  as  occur  through  removal  of  trustees  by  the  stock- 
holders. § 4255.  They  are  trustees  on  dissolution.  § 4274. 

Liability.  For  making  any  dividends  except  from  net  profits,  or 
for  illegally  paying  out  any  part  of  the  capital  stock,  the  trustees  are 
jointly  and  severally  liable  for  the  corporate  debts  to  the  full  amount 
so  paid  out.  § 4265.  Liability  may  be  avoided  by  entering  dissent  at 
large  on  the  minutes.  § 4265;  Tait  v.  Pigott,  32  W.  344. 

For  making  false  entries,  or  for  refusal  or  neglect  to  exhibit  the 
books  or  allow  them  to  be  inspected  and  extracts  made  therefrom,  or 
for  refusal  to  furnish  certified  copy  thereof  on  proper  demand,  offi- 


WASHINGTON. 


427 


cers  are  liable  to  fine  of  from  $100  to  $1,000  and  damages  to  the  in- 
jured party,  and  are  guilty  of  a misdemeanor.  § 4270.  For  false 
prospectus  or  representations  regarding  the  corporation,  officers  or 
agents  are  liable  to  imprisonment  of  from  one  to  five  years  in  peni- 
tentiary or  in  county  jail  not  more  than  one  year,  or  fine  not  ex- 
ceeding $2,000,  or  both.  L.  1903,  Ch.  93. 

Meetings.  Time,  place  and  notice  may  be  prescribed  by  by-laws, 
but  twenty  days’  notice  must  be  given  of  first  meeting.  § 4258.  A 
majority  of  the  whole  number  of  trustees  constitutes  a quorum.  § 4257. 

Executive  Committee.  No  provisions. 

10.  Officers. 

No  statutory  requirements.  But  annual  reports  must  be  signed 
by  president  and  secretary.  § 4259.  Officers  may  be  prescribed  by 
the  by-laws,  with  duties,  qualifications  and  compensation.  § 4253. 
There  must  be  a resident  officer  or  agent  on  whom  service  of  legal 
process  may  be  made.  § 4255.  (See  “Liability,”  under  § 9.) 

11.  Principal  Office. 

One  must  be  maintained  in  the  State  in  charge  of  an  officer  or 
agent,  on  whom  service  of  process  may  be  made.  § 4255.  It  may  be 
removed  from  one  county  to  another  by  filing  in  the  office  of  the 
auditor  of  the  county  to  which  it  moves,  a certified  copy  of  the  articles 
of  incorporation.  If  removal  is  made  to  some  other  locality  in  the 
same  county,  publication  must  be  made  once  a week  for  four  weeks 
in  the  newspaper  published  nearest  to  the  place  from  which  the  re- 
moval is  made.  § 4276. 

12.  Corporate  Books. 

What  Required.  Trustees  must  keep  a book  showing  the  names 
of  all  stockholders,  alphabetically  arranged,  shares  held  by  each,  and 
time  when  they  became  owners  of  same.  § 4269.  Also  a stock  trans- 
fer book  must  be  kept,  showing  names  of  the  parties  by  and  to  whom 
stock  is  transferred,  number  and  designation  of  shares,  and  the  date 
of  the  transfer.  § 4261. 

Where  Kept.  At  the  office  or  principal  place  of  business  of  the 
corporation.  § 4269. 

Examination  of.  The  stock  book  is  to  be  open  to  inspection  of 
stockholders  and  creditors  during  usual  business  hours.  They  may 
make  extracts  or  may  demand  and  receive  a certified  copy  of  any 
entry  therein,  and  of  any  paper  on  file  in  the  office  of  the  company. 

§ 4269. 

13.  Reports. 

Every  corporation  must  annually  on  or  before  the  second  Tues- 
day of  January  file  with  the  auditor  of  the  county  in  which  it  has  its 


428 


CLASSIFIED  CORPORATION  LAWS. 


(Washington) 

principal  place  of  business,  a statement  sworn  to  by  its  president,  at- 
tested by  its  secretary  under  the  corporate  seal,  containing  a list  of 
its  officers,  their  titles,  names  and  addresses  and  the  term  for  which 
they  have  been  chosen.  § 4259.  (For  tax  returns  see  “Local  Tax- 
ation,” under  § 2.) 

Publication  for  four  weeks  is  required  of  notice  of  establishment 
or  removal  of  principal  place  of  business  (§  4276);  of  dissolution,  or 
of  increase  or  decrease  of  capital  stock,  eight  weeks.  §§  4272,  4275. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Foreign  corporations  may  ac- 
quire the  same  powers  and  privileges  as  domestic  corporations  of  the 
same  class,  by  filing  and  recording  with  the  Secretary  of  State  a copy 
of  charter  or  articles  of  incorporation,  certified  by  the  officer  who 
issued  the  same  or  who  is  custodian  thereof  (§§  4291,  4292);  together 
with  the  appointment  in  writing  under  the  corporate  seal,  signed  by 
the  president  or  other  chief  officer,  of  an  agent  residing  at  the  place 
where  the  principal  business  of  the  company  is  to  be  carried  on.  The 
appointment  must  contain  the  name  and  residence  of  the  agent,  the 
location  of  the  principal  place  of  business  of  the  incorporation  and^ 
must  authorize  the  agent  to  accept  service.  This  appointment  is  re- 
corded by  the  Secretary  of  State.  § 4293.  Fees  are  the  same  as  for 
domestic  corporations.  § 4285;  L.  1903,  Ch.  151.  But  no  foreign  cor- 
poration organized  to  deal  in  real  estate  shall  be  permitted  to  do 
business  in  the  State  (§  4291),  nor  may  any  corporation,  the  majority 
of  the  capital  stock  of  which  is  owned  by  aliens,  own  land  other 
than  mineral  deposits.  § 4291;  Const.,  Art.  II,  § 33. 

Penalties  for  Non-Compliance.  Agents  conducting  business  in 
the  State  contrary  to  any  of  the  above  provisions  are  guilty  of  a mis- 
demeanor, punishable  by  fine  not  exceeding  $250  or  imprisonment  not 
exceeding  three  months,  or  both.  § 4298;  L.  1899,  Ch.  58. 

Taxation.  Annual  license  fees  are  the  same  as  of  domestic  cor- 
porations with  same  penalties.  § 4289. 

Books  and  Reports.  Are  the  same  as  prescribed  for  domestic 
corporations.  §§  1676,  4291;  Const.,  Art.  XII,  § 7. 

15.  Combinations  and  Monopolies. 

Monopolies  and  trusts  for  the  purpose  of  fixing  the  price  or  lim- 
iting the  production  or  regulating  the  transportation  of  any  product 
or  commodity,  are  prohibited.  Const.,  Art.  XII,  § 22.  Discrimination 
in  charges  by  railroad  companies  is  also  prohibited.  Id.,  § 15.  The 
constitutional  provision  has  been  carried  into  effect  only  by  a law 
as  to  commission  merchants,  prohibiting  “any  combination,  conspir- 
acy or  pool  for  the  purpose  of  artificially  raising  or  depressing  the 
market  prices  of  any  farm,  dairy,  orchard  or  garden  produce,  or  of 
excluding  from  the  market  the  produce  of  any  particular  locality 
grown  or  manufactured  by  any  person.”  § 2920.  Violation  made  mis- 
demeanor, punishable  by  fine  not  exceeding  $250  or  imprisonment  not 
exceeding  six  months,  or  both  (§  2925),  and  revocation  of  license. 

§ 2926. 


WEST  VIRGINIA 


1.  Corporation  Laws.* 

Constitution.  (1872.)  No  corporation  shall  be  created  by  special 
law.  Art.  XI,  § 1.  Stockholders  shall  be  liable  for  corporate  indebted- 
ness to  the  amount  of  their  stock  subscribed  and  unpaid  and  no  more. 
Id.,  § 2.  In  elections  of  directors  stockholders  may  vote  in  person 
or  by  proxy,  and  shall  have  one  vote  for  each  share  of  stock  owned; 
cumulative  voting  must  be  allowed.  Id.,  § 4. 

Statutes.  The  corporation  laws  are  found  mainly  in  the  Code  of 
West  Virginia,  1899,  amended  in  1901,  1903  and  1905.  Chapter  54 
authorizes  the  formation  of  corporations  for  certain  enumerated  pur- 
poses and  “for  any  other  purpose  or  business  useful  to  the  public 
for  which  a firm  or  co-partnership  may  be  lawfully  formed  in  this 
State.”  Corporations  so  formed  are  subject  to  the  provisions  of 
Chapters  52  and  53  of  the  Code  so  far  as  applicable.  Chapter  32, 
governing  taxation  of  corporations,  has  been  entirely  re-enacted  in 
L.  1905,  Ch.  36. 

Certain  classes  of  corporations,  such  as  title  and  trust,  fidelity, 
surety  and  bonding  companies,  are,  however,  formed  under  inde- 
pendent acts  of  the  Legislature.  Banks,  insurance  and  railroad  com- 
panies, building  and  loan  associations,  etc.,  though  formed  under  the 
provisions  of  Chapter  54,  are  subject  to  special  provisions. 

Corporations  to  buy  and  sell  land  for  profit  can  not  be  formed 
under  Chapter  54.  Ch.  54,  § 3. 

2.  Taxes  and  Fees. 

For  purposes  of  taxation,  domestic  corporations  are  divided  into 
resident  and  non-resident  corporations,  the  latter  having  their  prin- 
cipal place  of  business  or  chief  works  located  without  the  State. 
L.  1905,  Ch.  36. 

Organization  Expenses.  The  organization  tax  in  West  Virginia 
is  merely  the  license  tax  for  the  first  year  which  must  be  paid  in 
advance  to  the  Secretary  of  State  before  the  charter  will  issue.  The 
license  year  begins  on  the  first  day  of  May.  Any  agreement  of  incor- 
poration issued  between  May  1st  and  the  last  day  of  July  inclusive, 
involves  payment  of  the  full  annual  tax  for  the  current  year.  If 
issued  after  July  31st  and  before  the  first  day  of  the  ensuing  March, 
the  corporation  must  pay  one-tenth  the  full  amount  of  the  annual 

* References,  except  as  otherwise  noted,  are  to  the  Code  of  West  Virginia 
(1899). 


429 


43^ 


CLASSIFIED  CORPORATION  LAWS. 


tax  for  each  month  or  fraction  thereof  from  the  date  of  incorporation 
up  to  the  first  day  of  the  following  May.  In  no  case,  however,  shall 
the  amount  paid  be  less  than  $5  for  a resident  corporation  and  $10 
for  a non-resident  corporation.  If  the  certificate  issues  on  or  after 
the  first  day  of  March  and  before  the  first  day  of  May,  the  corpor- 
ation must  not  only  pay  its  proportional  tax  up  to  the  first  of  May, 
but,  in  addition,  the  full  tax  for  the  following  year.  L.  1905,  Ch.  36, 
§§  126-129. 

In  addition  to  the  annual  license  tax,  fees  must  be  paid  to  the 
Secretary  of  State  as  follows:  For  filing  agreement  for  incorporation 

and  issuing  charter,  $10,  but,  if  the  agreement  contains  over  400 
words,  exclusive  of  certificates,  6 cents  additional  must  be  paid  for 
each  thirty  words  of  such  excess;  for  certified  copy  of  charter  to  be 
filed  in  Clerk’s  office  (See  “Organization”),  $10,  and  6 cents  additional 
for  each  thirty  words  it  may  contain  in  excess  of  400;  for  recording 
power  of  attorney  of  resident  agent  (not  necessary  for  resident  cor- 
porations), $3.  L.  1904,  Ch.  13. 

If  the  corporation  desires  to  hold  over  10,000  acres  of  land  in 
West  Virginia,  a tax  of  5 cents  per  acre  for  each  acre  in  excess  of 
10,000  must  be  paid  the  Secretary  of  State.  Ch.  54,  § 6,  subdiv.  VII; 
L.  1905,  Ch.  36.  This  tax  is  payable  but  once. 

Fees  to  the  County  Clerk:  For  filing  and  recording  charter, 

$2.50  and  3 cents  for  each  thirty  words  it  may  contain  in  excess  of 
400;  for  filing  and  recording  power  of  attorney  to  resident  agent  (not 
necessary  for  resident  corporations),  $1.25. 

The  annual  fee  to  resident  agent  (See  § 4,  “Organization”)  is 
.usually  $10. 

Franchise  Tax.  The  annual  license  tax  is  based  upon  the  au- 
thorized capital  stock  and  is  different  for  resident  and  non-resident 
corporations.  For  resident  corporations  it  is  as  follows: 

Capital  stock  not  exceeding  $5,000,  $10. 

Exceeding  $5,000  but  not  more  than  $10,000,  $15. 

Exceeding  $10,000  but  not  more  than  $25,000,  $20. 

Exceeding  $25,000  but  not  more  than  $200,000,  $20  for  first  $25,000 
and  $5  for  each  additional  $25,000  or  fraction  thereof. 

Exceeding  $200,000  but  not  more  than  $500,000,  $55  for  first  $200,- 
000  and  $15  for  each  additional  $100,000  or  fraction  thereof. 

Exceeding  $500,000  but  not  more  than  $1,000,000,  $150. 

Exceeding  $1,000,000,  $150  for  first  $1,000,000  and  $40  for  each 
additional  $1,000,000  or  fraction  thereof.  L.  1905,  Ch.  36,  § 126. 

For  non-resident  corporations: 

Capital  stock  not  exceeding  $10,000,  $15. 

Exceeding  $10,000  but  not  more  than  $25,000,  $20. 

Exceeding  $25,000  but  not  more  than  $100,000,  $20  for  first  $25,000 
and  $10  for  each  additional  $25,000  or  fraction  thereof. 

Exceeding  $100,000  but  not  more  than  $1,000,000,  $50  for  first 
$100,000  and  25  cents  for  each  additional  $1,000  or  fraction  thereof. 

Exceeding  $1,000,000  but  not  more  than  $2,000,000,  $275  for  first 
$1,000,000  and  20  cents  for  each  additional  $1,000  or  fraction  thereof. 

Exceeding  $2,000,000  but  not  more  than  $4,000,000,  $475  for  first 
$2,000,000  and  10  cents  for  each  additional  $1,000  or  fraction  thereof. 

Exceeding  $4,000,000,  $675  for  first  $4,000,000  and  $50  for  each 
additional  $1,000,000  or  fraction  thereof.  L.  1905,  Ch.  36. 


WEST  VIRGINIA. 


431 


The  license  tax  year  begins  May  1st  and  the  tax  must  be  paid  in 
advance.  The  State  Auditor  must,  between  the  fifteenth  day  of  Feb- 
ruary and  the  fifteenth  day  of  March,  notify  every  corporation  liable 
to  this  tax,  of  its  amount  and  time  of  payment.  Any  tax  on  land  in 
excess  of  10,000  acres  (See  under  § 2,  “Organization  Expenses”)  must 
be  paid  at  this  time — if  not  already  paid — under  same  penalty  as 
prescribed  for  failure  to  pay  license  tax.  L.  1905,  Ch.  36.  (See  § 13, 
“Reports.”)  License  tax  notices  are  sent  to  post-office  address  of 
corporation,  as  shown  by  the  records  in  the  office  of  Secretary  of 
State,  or  may  be  sent  to  the  resident  agent  if  the  corporation  be  non- 
resident. 

The  license  tax  is  payable  on  or  before  May  1st  to  the  State 
Auditor.  If  not  paid  by  May  1st,  name  of  the  delinquent  corporation 
is  published,  and  a penalty  is  then  incurred  of  one  per  cent,  per  month 
for  the  period  of  delinquency,  but  in  no  case  less  than  $5.  If  the  de- 
linquency is  continued  for  thirty  days  after  September  1st,  proceed- 
ings are  begun  for  forfeiture  of  charter.  L.  1905,  Ch.  36. 

Local  Taxation.  Is  based  upon  the  actual  value  of  the  capital 
employed  or  invested  in  the  corporate  trade  or  business.  This  is  de- 
termined by  deducting  from  the  corporate  assets  any  property  which 
may  be  exempt,  any  realty  which  is  taxed  where  located,  and  any 
amounts  owed  to  others  as  principal  debtors.  Stockholders  are  not 
taxed  on  their  individual  holdings  of  stock.  Ch.  29,  § 64.  Non-resi- 
dent corporations  having  no  capital  employed  in  the  State  are  not, 
in  practice,  taxed  locally. 

General.  Fee  to  Secretary  of  State:  For  certified  copy  of  agree- 

ment of  incorporation,  $10;  for  filing  a certificate  of  change  of  name, 
of  increase  or  decrease  of  authorized  capital  stock,  of  change  of  prin- 
cipal office,  or  amendment  to  certificate  of  incorporation,  $5;  for  re- 
cording a power  of  attorney  and  certificate  thereof,  $3;  for  any  other 
certificate,  $5.  These  fees  include  cost  of  the  great  seal  or  the  less 
seal  impressed  on  any  such  documents,  as  well  as  the  filing,  recording 
and  indexing  of  same. 

Fee  to  Secretary  of  State  for  endorsing,  filing  and  indexing  re- 
ports of  corporations,  and  all  other  papers,  $1  each.  L.  1904,  Ch.  13. 

3.  Incorporation. 

Incorporators.  Must  be  five  or  more.  No  residential  require- 
ments. Ch.  54,  § 6.  Ejach  must  have  paid  in  10  per  cent,  of  subscrip- 
tion before  agreement  is  filed  with  Secretary  of  State.  Id.,  § 7. 

Agreement  of  Incorporation.  Must  be  signed  and  acknowledged 
by  each  of  the  incorporators  and  contain  (Ch.  54,  § 8) : 

(1)  Name,  which  must  not  be  so  similar  to  that  of  an 
existing  corporation  of  the  State  that  in  the  opinion  of  the 
Secretary  of  State  it  will  lead  to  confusion  or  uncertainty. 

(2)  Location  of  principal  place  of  business,  stating  the 
name  of  the  city  or  town,  the  street  number,  the  county  and 
state,  territory  or  country;  also  if  it  has  or  is  to  have  chief 
works,  their  present  or  prospective  location,  if  within  the 


CLASSIFIED  CORPORATION  LAWS. 


4 32 

State  giving  the  district  and  county,  or,  if  without  the  State, 
the  state,  territory  or  country. 

(3)  The  objects  for  which  it  is  formed. 

(4)  The  amount  of  the  total  authorized  capital  stock;  the 
number  of  shares  into  which  it  is  divided  with  the  par  value 
of  each  share,  the  amount  subscribed,  and  the  amount  paid 
in.  If  there  be  more  than  one  class  of  stock,  a description 
of  each  class  with  the  terms  of  its  issue. 

(5)  The  names  and  post-office  addresses  of  the  incorpora- 
tors and  the  number  of  shares  subscribed  for  by  each. 

(6)  The  period  of  duration  of  the  corporation.  Limited 
to  fifty  years.  Ch.  54,  § 11. 

(7)  Any  provisions  which  the  incorporators  choose  to  in- 
sert for  the  regulation  of  the  business  and  for  the  conduct 
of  the  affairs  of  the  corporation.  Id.,  § 6;  L.  1901,  Ch.  35. 

If  the  company  desires  to  hold  more  than  ten  thousand  acres  of 
land  in  the  State,  the  agreement  must  set  forth  the  maximum  acreage 
to  be  held.  Ch.  54,  § 6;  L.  1901,  Ch.  35. 

The  statutes  contain  no  requirements  as  to  amount  of  subscrip- 
tion to  be  made  by  each  incorporator,  but  10  per  cent,  of  the  amount 
subscribed  must  be  paid  in  (Ch.  54,  § 7)  before  the  agreement  of  in- 
corporation is  filed,  and  an  affidavit  must  be  made  by  two  of  the 
incorporators  and  attached  to  the  agreement,  certifying  that  such 
payment  has  been  made  in  good  faith.  Ch.  54,  § 8. 

Where  it  is  desired  to  qualify  as  a resident  corporation  and  thus 
take  advantage  of  the  lower  license  fee  for  such  corporations,  at  least 
two  of  the  incorporators  must  make  an  affidavit  in  form  prescribed, 
to  the  effect  that  the  principal  place  of  business  and  the  chief  works 
are  located  in  the  State  in  good  faith,  and  not  to  evade  the  law. 
L.  1905,  Ch.  36,  § 127. 

Filing  and  Recording.  The  agreement,  with  the  incorporators’ 
acknowledgments  and  affidavits,  must  be  filed  with  the  Secretary  of 
State  who,  upon  payment  of  his  fees  and  the  license  fee  for  first 
year,  issues  a charter  under  the  Great  Seal  of  the  State.  L.  1905, 
Ch.  36,  §§  126-128. 

Within  three  months  after  its  issue  the  corporate  charter  or  a cer- 
tified copy  thereof  must  be  filed  with  the  clerk  of  the  county  where 
the  principal  office  is  located,  or  if  that  is  in  another  state,  in  the 
county  where  the  agent  designated  to  receive  service  of  process  re- 
sides. Ch.  54,  § 20;  L.  1901,  Ch.  35. 

4.  Organization. 

First  Meetings.  The  first  meeting  of  stockholders  for  election  of 
directors  and  adoption  of  by-laws  may  be  held  within  or  without  the 
State  (Ch.  54,  § 23)  as  soon  as  charter  is  granted  and  must  be  held 
within  six  months  of  that  time.  The  majority  of  the  incorporators 
fix  the  time  and  place  of  meeting.  Notice  thereof  must  be  given  in  a 
newspaper  of  general  circulation  near  principal  place  of  business  once 


WEST  VIRGINIA. 


433 


a week  for  two  weeks,  unless  waived  by  the  written  consent  or  pres- 
ence at  the  meeting  of  all  the  incorporators.  Ch.  54,  §§  15,  23;  L. 
t 901,  Ch.  35.  Voting  may  be  by  proxy,  and  cumulative  voting  must 
be  permitted.  Ch.  53,  § 44;  Const.,  Art.  XI,  § 4. 

The  directors  must  meet  as  soon  as  possible  after  the  election 
and  elect  a president  and  vice-president  from  their  own  number. 
Ch.  S3,  § 50;  L.  1901,  Ch.  35. 

An  attorney  to  receive  service  of  process  must  be  appointed  with- 
in thirty  days  after  organization.  Ch.  54,  § 24.  Foreign  and  non- 
resident domestic  companies  must  also  designate  the  State  Auditor 
as  such  attorney,  paying  him  an  annual  fee  of  $10  on  May  1st.  Pen- 
alty for  non-compliance,  $100,  and  on  refusal  to  pay  fine,  forfeiture 
of  charter.  L.  1905,  Ch.  39. 

Resident  domestic  corporations  must  file  name  of  attorney  with 
Secretary  of  State  and  clerk  of  county  of  principal  place  of  business. 
Ch.  54,  § 24. 

By-Laws.  May  be  adopted  and  amended  by  the  stockholders 
alone.  Ch.  53,  §§  2,  55.  They  may  provide  for  time,  place,  notice  and 
quorum  of  stockholders’  meetings  (Ch.  53,  §§  41,  42;  L.  1901,  Ch.  35), 
may  prescribe  number,  qualifications  and  quorum  of  directors  (Ch.  53, 
§ 49),  and  may  require  bonds  from  officers.  Ch.  53,  § 53;  L.  1901, 
Ch.  35.  All  these  matters  if  not  provided  for  in  the  by-laws  are 
regulated  by  statute. 

Certificates.  Within  ninety  days  after  the  election  of  officers,  a 
report  must  be  filed  with  the  Secretary  of  State,  giving  names  and 
addresses  of  the  president  and  secretary,  and  post-office  address  of  the 
principal  office  of  the  corporation.  Ch.  53,  § 46;  L.  1901,  Ch.  35. 

5.  Corporate  Existence. 

When  Commenced.  On  issuing  of  certificate  of  incorporation  by 
Secretary  of  State.  Ch.  54,  § 10.  Business  corporations  are  limited 
to  term  of  50  years.  Id.,  §11. 

Beginning  Business.  May  be  begun  as  soon  as  certificate  has 
been  issued.  Must  be  begun  within  one  year.  Ch.  53,  § 6. 

Renewal.  May  be  had  for  term  of  50  years  by  majority  vote  of 
stock  taken  at  a duly  notified  meeting.  Ch.  54,  §11,  amended  L.  1901, 

Ch.  35. 

Forfeiture  of  Charter.  On  failure  to  organize  and  begin  business 
within  one  year,  corporation  is  ipso  facto  dissolved.  Ch.  53,  § 6.  Sus- 
pension of  business  for  two  years  has  same  effect.  Id.,  § 7.  If  the 
number  of  stockholders  is  at  any  time  reduced  below  five,  and  re- 
mains so  for  six  successive  months,  the  corporation  is  dissolved. 
Id.,  § 17.  Failure  to  appoint  resident  agent  or  to  pay  annual  license 
fee,  is  ground  for  forfeiture.  Ch.  54,  § 24;  L.  1905,  Ch.  36,  § 136. 

Dissolution.  Majority  of  stockholders  at  a properly  notified  gen- 
eral meeting  may  vote  to  dissolve,  provided  all  debts  are  paid  or 
secured.  Certified  copy  of  the  resolution,  signed  by  the  president 
&nd  under  the  corporate  seal,  to  be  filed  with  Secretary  of  State  (Ch, 


434 


CLASSIFIED  CORPORATION  LAWS. 


53,  § 56),  and  resolution  must  be  published  six  weeks.  Involuntary- 
dissolution  and  receivership  provided  for.  Id.,  §§  57-59. 


6.  Corporate  Powers. 

General.  The  usual  powers  are  enumerated.  Ch.  52,  § 1. 

To  Hold  Property.  Corporations  may  hold  both  real  and  per- 
sonal property  necessary  to  carry  out  purposes  of  incorporation.  Ch. 
52,  § 1.  Real  estate  is  limited  to  10,000  acres  in  the  State  unless  the 
articles  of  incorporation  authorize  a greater  amount.  Ch.  54,  § 6. 

Its  Own  Stock.  This  power  is  granted.  The  corpora- 
tion may  either  cancel,  hold,  or  sell  the  stock.  While  owned  by  the 
company  it  is  non-dividend  bearing  and  not  entitled  to  vote.  Ch.  53, 
§ 18;  L.  1901,  Ch.  35. 

Stock  of  Other  Corporations.  Corporations  may  pur- 
chase securities  of  any  joint  stock  company  or  become  surety  for 
same.  Ch.  53,  § 3.  If  engaged  in  manufacturing,  a two-thirds  vote 
of  the  stock  is  required  prior  to  such  subscription  or  guaranty. 
Ch.  53,  § 3. 

To  Borrow  Money.  No  limitations  imposed.  There  are  regula- 
tions for  mortgaging  property  and  franchises,  issuing  registered  or 
coupon  bonds  and  exchange  of  one  for  the  other  at  the  option  of  the 
holder.  Ch.  54,  §§  82-82  b. 

To  Do  Business  in  Other  States.  Corporations  are  given  full 
power  to  conduct  their  business,  maintain  their  principal  office  and 
hold  meetings  of  both  stockholders  and  directors  outside  the  State. 
Ch.  54,  § 23;  L.  1901,  Ch.  35. 

Consolidation  or  Merger.  No  statutory  provisions,  except  as  to 
railroad  corporations.  Ch.  54,  § 53.  Prohibited  between  competing 
roads.  Const.,  Art.  XI. 

Amendment  of  Charter.  There  is  no  general  provision  for 
amendment  of  charter.  An  entirely  new  agreement  may  be  made  by 
observing  the  same  formalities  as  are  required  to  secure  original 
charter.  Ch.  54,  § 10;  L.  1901,  Ch.  35.  The  capital  stock  may  be  in- 
creased or  diminished,  or  the  par  value  of  shares  changed  by  majority 
vote  of  the  stock.  Ch.  54,  §§  21,  22;  L.  1901,  Ch.  35.  Corporate  ex- 
istence may  be  extended.  Ch.  54,  § 11;  L.  1901,  Ch.  35.  Corporate 
name  may  be  changed.  Ch.  53,  § 12.  The  principal  office  may  be 
moved.  Ch.  54,  § 21. 


7.  Capital  Stock. 

Amount.  Unlimited. 

Initial  Payment.  Ten  per  cent,  of  amount  subscribed.  Ch.  54,  § 7. 

Consideration  for  Issue.  Money,  property  or  services,  if  taken  at 
fair  valuation,  may  be  accepted  for  stock.  Bank  v.  Lumber  Co.,  32 
W.  Va.  357;  Richardson  v.  Graham,  45  W.  Va.  134.  Stock  must  be 


WEST  VIRGINIA. 


435 


sold  at  par  unless  three-fourths  of  the  outstanding  stock  votes  other- 
wise at  properly  called  special  meeting.  Ch.  53,  § 24;  L.  1901,  Ch.  35. 

Where  property  or  services  are  accepted  in  exchange  for  stock, 
details  must  be  entered  on  the  permanent  records  of  the  company. 
Id.  At  least  ten  per  cent,  of  par  value  of  each  share  must  be  paid  on 
subscribing,  and  the  residue  as  required  by  the  directors.  Ch.  53, 
§§  25,  26. 

Increase  or  Decrease.  Of  capital  may  be  effected  by  majority 
vote  of  stock  at  meeting  held  on  two  weeks’  published  notice.  Certi- 
fied copy  of  resolution  signed  by  president  must  be  filed  with  Secre- 
tary of  State.  Ch.  54,  §§  21,  22. 

Classes  of  Stock.  The  agreement  of  incorporation  may  provide 
for  classification  of  stock,  or  by-laws  may  regulate  its  issue.  Also 
stockholders  may  issue  preferred  stock  without  provision  having 
been  made  in  either  of  these  ways,  but  two  weeks’  notice  of  special 
meeting  for  the  purpose  must  be  published  in  newspaper  near  prin- 
cipal office.  Ch.  S3,  § 16.  If  issue  be  made  under  authority  of  a 
resolution  or  a by-law,  notice  must  first  be  published  two  weeks  in 
county  of  principal  office,  or  if  a non-resident  corporation,  at  capital 
of  the  State.  Ch.  53,  § 16;  L.  1901,  Ch.  35. 

Par  Value  of  Shares.  May  be  of  any  amount  but  all  shares  must 
be  of  same  denomination.  Ch.  53,  § 15.  May  be  changed  in  same 
manner  as  stock  is  increased  or  decreased.  Ch.  54,  § 21. 

Stock  Certificates.  Certificates  must  be  signed  by  the  president 
or  vice-president  and  such  other  officers  as  the  board  of  directors 
determine.  The  amount  paid  on  each  share  must  appear  on  the  cer- 
tificate and  corporate  seal  must  be  affixed.  Ch.  53,  § 35. 

Transfer  of  Stock.  By-laws  are  to  prescribe  mode  of  making 
transfers.  Ch.  53,  § 21.  Shares  not  fully  paid  for  may  be  transferred 

only  with  the  consent  of  the  directors.  Id.,  § 22.  Original  certifi- 

cate must  be  surrendered  unless  proved  to  have  been  lost  or  destroyed. 
Id.,  § 36.  Endorsement  and  delivery  passes  title  but  the  corporation 
may  treat  stockholder  of  record  as  the  owner  of  the  recorded  stock. 

Id.,  §§  19,  37.  The  stock  transfer  book  may  be  closed  by  order  of 

directors  thirty  days  before  stockholders’  meeting.  Ch.  53,  § 21. 

8.  Stockholders. 

Rights  and  Powers.  May  remove  directors.  Ch.  53,  § 49.  May 
sell  property  and  assets  by  vote  of  sixty  per  cent,  of  stock.  Ch.  54, 
§ 83.  May  authorize  sale  of  stock  below  par  by  three-fourths  vote. 
Ch.  53,  § 24.  May  dissolve  corporation,  amend  charter,  or  adopt  new 
agreement  by  majority  vote.  Ch.  53,  § 56;  Ch.  54,  § 10. 

Liability.  Stockholders  are  liable  only  to  amount  of  unpaid  sub- 
scriptions. Const.,  Art.  II,  § 2. 

Meetings.  May  be  held  at  principal  office,  either  within  or  with- 
out State,  unless  otherwise  provided  by  by-laws.  Ch.  54,  § 23.  If  no 


436 


CLASSIFIED  CORPORATION  LAWS. 


other  date  is  provided  by  by-laws,  annual  meeting  must  be  held  on 
fourth  Tuesday  of  January,  at  n a.  m.  Ch.  53,  § 41;  L.  1901,  Ch.  35. 

Notice.  By-laws  may  provide  for  notice  of  meetings.  If  other- 
wise, notice  must  be  given  by  publication  once  a week  for  two  suc- 
cessive weeks  in  newspaper  of  general  circulation  near  principal  office, 
if  that  is  within  the  State,  otherwise  in  newspaper  published  at  capital 
of  State.  Ch.  53,  § 41. 

Quorum.  Unless  otherwise  provided  by  by-laws,  a majority  con- 
stitutes a quorum.  Ch.  53,  § 42. 

Voting.  Each  share  is  entitled  to  one  vote  at  ordinary  meet- 
ings. Ch.  53,  § 44.  At  elections  the  stockholders  have  the  right  to 
cumulate  their  votes.  Const.,  Art.  XI,  § 4.  Transfer  book  to  be 
closed  not  . exceeding  thirty  days  before  meeting.  Ch.  53,  § 4. 

Proxies.  Voting  by  proxy  is  allowed;  to  be  regulated  by  by- 
laws. 

9.  Directors. 

General.  Unless  otherwise  provided  by  the  by-laws,  directors 
must  be  stockholders  and  residents  of  the  State.  Ch.  53,  § 49.  They 
hold  office  until  their  successors  are  elected  and  qualified.  Id. 

Number.  Unless  otherwise  prescribed  in  the  by-laws,  there  must 
be  five  directors.  Ch.  53,  § 49.  Number  may  be  changed  by  amend- 
ment to  by-laws  and  there  is  no  requirement  as  to  filing  notice  of 
change.  Id. 

Qualifications.  May  be  prescribed  by  by-laws.  Otherwise  every 
director  must  be  a stockholder  and  a resident  of  the  State.  Ch.  53, 
§ 49.  By-laws  may  require  bonds.  Ch.  53,  § 53. 

Powers.  The  directors  have  full  power  to  manage  the  corpora- 
tion subject  to  by-laws  adopted  by  stockholders.  Ch.  53,  §§  49,  55. 
Have  power  to  fill  vacancies  on  the  board  but  not  to  replace  a director 
removed  by  the  stockholders.  Id. 

Meetings.  May  be  held  either  within  or  without  the  State.  Ch. 
54,  § 23.  The  board  may  prescribe  when  and  where  their  meetings 
are  to  be  held  and  what  notice  shall  be  given.  Ch.  53,  § 51.  A ma- 
jority is  required  to  constitute  a quorum,  unless  otherwise  prescribed 
by  by-laws.  Ch.  53,  § 49.  Records  to  be  signed  by  secretary  and 
chairman.  Ch.  53,  § 52.  No  member  to  vote  on  question  in  which 
he  is  interested.  Id. 

Executive  Committee.  The  board  of  directors  may  appoint  an 
executive  committee  from  their  own  number.  Ch.  53,  § 53. 

10.  Officers. 

A president  and  a vice-president  are  prescribed,  who  must  be 
directors  (Ch.  53,  § 50),  also  a secretary  to  keep  the  records  (Ch.  53, 
§ 52);  and  the  board  of  directors  may  appoint  such  other  officers  and 
agents  as  they  deem  necessary,  to  hold  office  during  the  pleasure  of 
the  board.  They  may  be  required  to  give  bonds.  Ch.  53,  § 53.  Sec- 
retary must  be  required  to  take  oath.  Ch.  53,  § 52. 


WEST  VIRGINIA. 


437 


11.  Principal  Office. 

May  be  located  either  within  or  without  the  State.  Ch.  54,  § 23. 
May  be  changed  by  vote  of  majority  of  stock.  Ch.  54,  § 21.  The  loca- 
tion of  principal  office  must  be  registered  with  Secretary  of  State 
within  ninety  days  after  it  is  determined  or  changed.  Ch.  53,  § 46; 
L.  1901,  Ch.  35.  Penalty  for  non-compliance,  $25  to  $100  fine.  Id. 

12.  Corporate  Books. 

What  Required.  A transfer  book  is  prescribed  to  be  kept  as  pro- 
vided by  by-laws.  Ch.  53,  § 21.  Also  regular  books  of  account  (Id., 
§ 54),  records  of  proceedings  of  board  of  directors  (Id.,  § 52),  list  of 
stockholders.  Id.,  § 43. 

Where  Kept.  No  requirements. 

Examination  of.  The  property,  funds,  books,  correspondence  and 
papers  of  the  company  are  at  all  times  subject  to  inspection  of  board 
of  directors  or  a committee  appointed  at  general  meeting  of  the 
stockholders.  Records  of  proceedings  of  the  board  are  open  for 
thirty  days  before  annual  meeting  to  inspection  of  committee  ap- 
pointed by  one-twentieth  of  the  stock,  and  must  be  produced  at  any 
general  meeting  if  required.  Ch.  53,  § 47;  L.  1901,  Ch.  35.  List  of 
stockholders,  with  number  of  shares  of  each,  must  be  posted  at  prin- 
cipal office  one  month  before  annual  meeting.  Id.,  § 43.  The  books 
and  papers  are  also  subject  to  examination  by  legislative  committees 
or  agents.  Id.,  § 60. 

13.  Reports. 

Within  ninety  days  after  every  election,  or  change  in  officers  or 
location  of  principal  office,  the  directors  must  cause  to  be  filed  with 
the  Secretary  of  State,  a report  stating  the  names  and  post-office  ad- 
dresses of  president  and  secretary  and  date  of  their  election,  and  post- 
office  address  of  the  principal  office  of  the  corporation,  with  street 
and  number,  if  any.  Penalty  for  failure  is  fine,  $25  to  $100.  Ch.  53, 
§ 46. 

At  the  time  of  paying  annual  license  tax,  every  domestic  cor- 
poration must  deliver  to  the  Auditor  a statement  signed  by  its  presi- 
dent, secretary  or  treasurer,  showing:  The  name  of  the  corporation; 

date  of  its  charter;  name  and  post-office  address  of  its  attorney  of 
record  in  the  State;  names  and  post-office  addresses  of  its  president, 
secretary  and  treasurer;  amount  of  its  authorized  capital  stock;  num- 
ber of  acres  of  land  held  in  the  State,  if  the  number  exceed  10,000 
acres;  and  such  other  facts  as  the  Auditor  may  require.  L.  1905,  Ch. 
36,  § 133- 

Reports  under  oath  of  president  and  secretary  or  bookkeeper, 
stating  property,  liability  and  condition,  may  be  required  by  Legisla- 
ture. Ch.  53,  § 60. 

Every  resident  domestic  corporation,  except  railroad,  foreign  in- 
surance, telegraph,  express,  telephone,  pipe  line,  car  line,  bank  and 
trust  companies,  must  also  annually  between  April  1st  and  June  1st 
make  report,  verified  by  president  or  chief  accounting  officers,  to  the 


CLASSIFIED  CORPORATION  LAWS. 


43$ 


assessor  of  the  county  in  which  principal  office  or  place  of  business 
is  located,  stating  authorized  capital,  amount  paid  in  on  each  share, 
assets  (in  detail  as  prescribed),  moneys,  credits,  real  estate  and  per- 
sonal property,  itemized  statement  of  indebtedness  desired  to  be 
deducted.  L.  1905,  Ch.  35,  §§  67,  77. 

Directors  must  at  each  annual  meeting  report  in  detail  as  to  the 
condition  of  the  company.  Ch.  53,  § 46. 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  Must  file  certified  copies  of 
charter  with  Secretary  of  State  and  with  clerk  of  one  of  the  counties 
where  corporation  does  business.  There  must  also  be  filed  with  the 
Secretary  of  State  an  acceptance  of  the  laws  governing  foreign  cor- 
porations. Also  a report  similar  to  annual  report,  stating  sufficient 
facts  to  form  basis  for  annual  license  tax  for  current  year. 

The  State  Auditor  must  be  appointed  attorney  in  fact  to  receive 
service  of  process,  and  power  of  attorney  to  him  is  filed  in  his  office. 
L.  1905,  Ch.  39. 

The  Secretary  of  State  issues  a certificate  of  compliance  with  the 
law  and  the  same  must  be  filed  and  recorded  with  the  clerk  of  one  of 
the  counties  where  business  is  conducted,  together  with  a copy  of  the 
company’s  charter.  Ch.  54,  § 30. 

Fees.  To  Secretary  of  State  for  certificate,  $5.  For  filing  cer- 
tificate of  acceptance,  $1;  for  recording  power  of  attorney  and  issu- 
ing certificate,  $3.  To  Auditor,  $10.  L.  1905,  Ch.  39.  Also  annual 
license  tax  for  current  year.  L.  1905,  Ch.  36,  § 131. 

Penalties  for  Non-Compliance.  Fine  of  from  $500  to  $1,000  for 
each  month  during  which  business  is  done  without  authority.  Ch.  54, 
§ 30.  Non-compliance  also  constitutes  a misdemeanor. 

Taxation.  To  State  Auditor:  An  annual  license  tax,  based  on 

amount  of  property  owned  and  employed  in  the  State  as  shown  by 
report  submitted  to  Auditor  in  February,  must  be  paid.  The  mini- 
mum tax  is  $100.  L.  1905,  Ch.  36,  §§  126,  128,  130,  131.  Local  taxation, 
same  as  for  domestic  corporations.  Ch.  29,  §§  51,  64.  If  the  com- 
pany has  property  of  $5,000  in  State  it  must  pay  the  same  license 
tax  as  domestic  corporations.  If  its  property  is  under  that  amount, 
it  must  pay  the  same  as  that  required  of  non-resident  domestic  com- 
panies. L.  1905,  Ch.  36,  §§  126,  128,  130,  136,  137. 

Books.  No  statutory  provisions. 

Reports.  Must  be  made  annually,  in  the  month  of  February,  to 
the  State  Auditor,  and  be  verified  by  the  president,  secretary  or  other 
executive  officer,  setting  forth:  (1)  Name  of  corporation;  name  of 

state  or  country  by  which  incorporated;  date  of  incorporation;  date 
of  certificate  of  Secretary  of  State  authorizing  it  to  do  business  in 
West  Virginia;  place  of  principal  office;  names  and  post-office  ad- 
dresses of  president,  secretary,  and  officers  charged  with  making  re- 
turns for  taxation;  name  and  post-office  address  of  its  attorney  of 
record  in  this  State.  (2)  Number  of  shares  of  its  authorized  capital 
stock,  and  par  value  of  each  share.  (3)  Value  of  its  property  owned 
and  used  in  West  Virginia;  where  situated;  of  what  consisting;  num- 


WEST  VIRGINIA. 


439 


ber  of  acres  of  land  held  in  the  State,  and  value  of  ail  property  owned 
and  used  without  the  State.  (4)  Proportion  of  capital  stock  repre- 
sented by  property  owned  and  used  in  West  Virginia.  L.  1905,  Ch.  36, 
§ 130. 

15.  Combinations  and  Monopolies. 

No  provisions,  except  the  prohibition  of  consolidation  between 
competing  lines  of  railroad. 


WISCONSIN. 


1.  Corporation  Laws.* 

Constitution.  (1848.)  Corporations  to  be  created  by  general 
laws.  Art.  IV,  § 31;  Art.  XI.  § 1.  Credit  of  the  State  not  to  be  given 
or  loaned  to  aid  any  corporation.  Aft.  VIII,  § 3. 

Statutes.  The  general  corporation  law  of  Wisconsin  is  found 
in  the  Statutes  of  1898,  Title  XIX,  of  which  Chapters  85  and  86  con- 
tain general  provisions  and  Chapters  87-94  refer  specially  to  railroad, 
plank  and  turnpike,  insurance,  religious,  fraternal,  mutual  loan  and 
building,  and  banking  corporations.  Amendments  are  found  in  ‘Laws 
of  1899,  1901,  1903,  1905. 

Under  the  general  law  corporations,  except  those  subject  to  spe- 
cial acts,  may  be  formed  for  any  lawful  business.  § 1771. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State  on  filing  articles 
of  incorporation:  On  capitalization  of  $25,000  or  less,  $25,  and  $1  for 

each  additional  $1,000.  § 1772.  Mining  companies  engaged  in  mining- 

in  Wisconsin  pay  same  fees  as  other  corporations  on  a capitalization 
up  to  $150,000,  but  on  any  capital  stock  in  excess  of  that  sum,  the  fee 
is  $150.  Id.;  L.  1901,  Ch.  238.  For  beet  sugar  and  dairy  corporations 
the  fee  is  $10  without  regard  to  capitalization.  Id.  The  organization 
fee  covers  filing  and  recording. 

Recording  and  copying  fees  to  Register  of  Deeds  range  from 
five  to  twenty  cents  per  folio,  according  to  county  and  to  language 
used.  § 764.  Register’s  certificate,  25  cents.  L.  1905,  Ch.  507. 

Franchise  Tax.  None  imposed. 

Local  Taxation.  If  a corporation  pays  taxes  on  its  property  in 
the  same  manner  as  an  individual  its  stock  is  exempt.  § 1038. 

General.  On  increase  of  capital  stock,  $1  for  each  $1,000  of  in- 
crease; for  any  amendments,  $10.  But  for  sugar  and  dairy  product 
corporations,  the  fee  for  any  amendment  is  $5.  25  cents  must  be  paid 
to  Register  of  Deeds  for  certificate  of  recording,  which  is  transmitted 
by  him  to  Secretary  of  State.  § 1772;  L.  1905,  Ch.  507. 

* Sections  given  are  of  Statutes  of  1898,  except  as  otherwise  noted. 


440 


WISCONSIN. 


44I 


3.  Incorporation. 

Incorporators.  Must  be  three  or  more  adult  residents  of  the 
State.  § 1771.  They  are  in  control  until  the  directors  are  elected 
(§  1773)  and  are  personally  liable  for  all  debts  incurred — other  than 
to  stockholders — before  one-half  of  the  capital  stock  has  been  sub- 
scribed and  twenty  per  cent,  paid  in.  § 1773;  Pietsch  v.  Krause,  116 
Wis.  344. 

Articles  of  Incorporation.  Must  be  signed  and  acknowledged  by 
the  incorporators  and  contain  (§  1772) : 

(1)  Purposes  of  the  corporation. 

(2)  Name  and  location  of  the  corporation,  in  some  city, 
village  or  town  of  the  State.  The  name  must  not  contain 
names  of  individuals  in  the  manner  ordinarily  used  in  part- 
nerships or  business  names,  but  is  not  illegal  because  of 
omission  of  word  ‘‘limited.”  Must  be  such  as  to  distinguish 
it  from  any  other  domestic  corporation.  L.  1905,  Ch.  507. 

(3)  Capital  stock,  if  any;  number  of  shares  and  par  value 
of  each.  No  limitations  as  to  amount  of  capital  or  par 
value  of  shares. 

(4)  Designation  of  general  offices  and  number  of  direc- 
tors which  must  not  be  less  than  three;  directors  may  be  di- 
vided into  three  classes,  if  desired. 

(5)  Principal  duties  of  the  general  officers. 

(6)  Method  and  conditions  on  which  members  shall  be 
accepted,  discharged  or  expelled.  (In  stock  corporations  only 
stockholders  to  be  members.) 

(7)  Any  other  provisions  consistent  with  law,  including, 
if  desired,  the  duration  of  the  corporation’s  existence. 

Filing  and  Recording.  The  original  articles  of  incorporation  or 
a true  copy  thereof,  verified  as  such  by  the  affidavits  of  two  of  the 
signers,  must  be  filed  with  the  Secretary  of  State.  A like  verified 
copy,  with  a certificate  of  the  Secretary  of  State,  showing  date  of 
filing  in  his  office,  must  be  recorded  within  thirty  days  in  the  office 
of  the  Register  of  Deeds  of  the  county  in  which  the  corporation  is  lo- 
cated. § 1 772;  L.  1901,  Ch.  238.  The  Register  transmits  to  Secretary 
of  State  a certificate  of  date  of  recording,  and  the  latter  issues  certifi- 
cate of  incorporation.  L.  1905,  Ch.  507.  The  articles  are  profitably 
executed  in  duplicate,  this  being  the  intent  of  1905  amendments  (Ch. 
507)- 


4.  Organization. 

First  Meetings.  Of  stockholders  must  be  held  within  the  State. 
Stats.,  p.  1272.  May  be  held  any  time  after  one-half  of  the  capital 
stock  has  been  subscribed,  and  may  be  called  by  any  two  of  the  in- 
corporators on  ten  days’  notice  in  writing  given  personally,  or  by 


442 


CLASSIFIED  CORPORATION  LAWS. 


two  weeks’  publication,  but  notice  may  be  waived  if  all  the  subscribers 
for  stock  are  present  in  person  or  by  duly  authorized  attorney. 
§ 1773.  At  this  first  meeting  by-laws  are  adopted  and  directors  elect- 
ed. No  provisions  as  to  first  meeting  of  directors. 

By-Laws.  Are  usually  adopted  at  the  first  meeting  of  stock- 
holders and  may  provide  for  the  government  of  the  corporation,  the 
conduct  of  its  affairs,  management  of  its  property,  manner  of  calling 
and  conducting  meetings,  appointing  proxies  and  mode  of  voting  by 
proxy,  terms  of  officers,  and  for  officers  additional  to  those  designated 
in  the  articles.  Suitable  penalties  may  be  provided  for  failure  to  ob- 
serve by-laws,  not  exceeding  $20  for  any  one  offence.  § 1748. 

Certificates.  A list  giving  names  and  addresses  of  the  officers 
must  be  filed  within  ten  days  after  their  election,  in  the  office  of  the 
register  of  deeds  in  the  county  in  which  the  articles  of  incorporation 
are  recorded.  § 1775b.  Also  with  Secretary  of  State  within  twenty 
days  thereafter.  L.  1905,  Ch.  507,  § 5. 

5.  Corporate  Existence. 

When  Commenced.  On  leaving  copy  of  articles  of  incorporation 
for  record  with  register  of  deeds  of  county  where  corporation  is 
located.  § 1772.  It  may  be  perpetual,  unless  limited  in  articles.  Id. 
It  continues  three  years  after  dissolution,  with  directors  as  trustees, 
for  the  purpose  of  winding  up  affairs,  subject  to  power  of  court  of 
competent  jurisdiction.  § 1764. 

Beginning  Business.  May  not  be  commenced,  or  debts  contract- 
ed, until  one-half  of  capital  stock  has  been  subscribed  and  twenty 
per  cent,  thereof  actually  paid  in.  § 1773.  Must  be  commenced  with- 
in one  year.  § 1763. 

Renewal.  No  provisions,  the  law  contemplating  perpetual  ex- 
istence. 

Forfeiture  of  Charter.  For  insolvency  or  suspending  business  for 
one  year,  the  corporation  shall  be  adjudged  to  be  dissolved.  § 1763. 
Failure  to  keep  principal  office  in  the  State  with  records  and  books,  is 
cause  for  forfeiture.  § 1750.  Violation  of  law  against  trusts,  pools 
and  conspiracies  is  cause  for  forfeiture  of  the  charter,  and  Attorney 
General  must  bring  action  for  annulment  (§  i79ij,  k,  1;  L.  1905,  Ch. 
507),  and  Attorney  General  and  Legislature  have  general  visitorial 
powers.  On  failure  to  file  annual  report  for  one  year,  Secretary  of 
State  must  enter  forfeiture  on  his  records;  this  provision  to  take 
effect  March  1,  1907.  L.  1905,  Ch.  507. 

Dissolution.  May  be  had  by  two-thirds  vote  of  the  stock  at  a 
special  meeting,  unless  otherwise  provided  in  the  articles  of  incor- 
poration. Procedure  prescribed.  § 1789;  L.  1905,  Ch.  507. 

6.  Corporate  Powers. 

General.  General  powers  are  enumerated.  §§  1748,  1775. 

To  Hold  Property.  This  power  is  granted  to  extent  of  corporate 
needs  (§§  1748,  1767),  except  that  alien  corporations,  or  any  corpora- 


WISCONSIN. 


44  3 


tion,  more  than  twenty  per  cent,  of  the  stock  of  which  is  owned  by 
aliens,  may  not  hold  more  than  320  acres  of  land,  nor  any  interest  in 
excess  thereof,  except  such  as  may  be  received  in  payment  of  debts 
or  by  devise.  § 2200a. 

Its  Own  Stock.  A solvent  corporation  not  prohibited 
by  its  own  charter  may  purchase  its  own  stock.  Marvin  v.  Ander- 
son, hi  Wis.  387  (1901). 

Stock  of  Other  Corporations.  No  company  shall  hold 
stock  in  any  other  company  except  on  consent  of  three-fourths  of 
the  stock  of  each  company.  Special  provision  is  made  for  logging 
and  mining  companies  enabling  them  on  compliance  therewith  to 
hold  stock  in  other  corporations  of  a similar  or  supplementary  char- 
acter. § 1775.  Stock  so  held  is  to  be  voted  by  the  president  of  the 
holding  corporation,  unless  the  directors  appoint  some  other  person 
for  the  purpose,  and  one  or  more  of  the  officers  of  the  holding  cor- 
poration may  be  elected  directors  and  officers  of  the  other  corpora- 
tion. § 1776a;  L.  1905,  Ch.  12. 

To  Borrow  Money.  Money  may  be  borrowed  for  corporate  pur- 
poses on  consent  of  a majority  of  the  stock.  A sinking  fund  for  the 
payment  of  debts  may  be  created  in  like  manner.  § 1748;  L.  1903, 
Ch.  12;  L.  1905,  Ch.  382.  Property  and  franchises  may  be  mortgaged. 
Id. 

Bonds  may  be  issued  for  money,  labor  or  property  actually  re- 
ceived by  the  company,  which  estimated  at  the  true  money  value, 
equals  seventy-five  per  cent,  of  the  par  value  of  the  bonds.  Pfister 
v.  Co.,  83  Wis.  86  (1892).  Bonds  may,  however,  be  sold  at  the  best 
price  obtainable  on  the  stock  exchanges  of  Chicago,  New  York,  Bos- 
ton or  Philadelphia.  § 1753. 

To  Do  Business  in  Other  States.  Branch  offices  'or  places  of 
business  may  be  established  outside  of  the  State.  § 1748.  See  also 
L.  1905,  Ch.  507,  § 5. 

Consolidation  or  Merger.  No  special  provisions,  but  is  obviously 
permitted.  §§  1775,  1788;  Nat.,  etc.  Works  v.  Co.,  105  Wis.  48  (1899). 

Amendment  of  Charter.  May  be  made  to  modify  or  enlarge  the 
corporation’s  business  or  purposes,  change  its  name  or  location,  in- 
crease or  diminish  its  stock,  change  its  officers  or  directors,  if  not 
otherwise  provided  in  the  articles  themselves,  by  a two-thirds  vote 
of  the  outstanding  stock,  and  by  filing  and  recording  duplicate  cer- 
tificates of  amendment  executed  by  the  president  and  secretary  un- 
der the  corporate  seal  in  the  same  manner  as  were  original  articles. 
§ 1774;  L.  1901,  Ch.  238;  L.  1905,  Ch.  507. 


7.  Capital  Stock. 

Amount.  Not  prescribed. 

Initial  Payment.  Twenty  per  cent,  of  the  authorized  capital  stock 
must  be  paid  in  before  commencing  business.  § 1773.  One-half  of 
the  total  stock  must  be  subscribed.  Id. 

Consideration  for  Issue.  Must  be  money  or  labor  or  property 
actually  received  by  the  corporation,  which,  estimated  at  its  true 


444 


CLASSIFIED  CORPORATION  LAWS. 


money  value,  equals  the  par  value  of  the  stock;  all  issues  or  increase 
of  stock  in  violation  thereof  to  be  void.  Stocks,  however,  may  be 
sold  on  the  stock  exchanges  of  Chicago,  New  York,  Boston  or  Phila- 
delphia at  the  best  price  obtainable.  § 1753;  La  Crosse  Co.  v.  God- 
dard, 114  Wis.  610  (1902). 

Assessments  may  be  made  by  the  directors  in  their  discretion, 
unless  otherwise  prescribed  by  the  articles  of  incorporation  or  by- 
laws. Payment  thereof  may  be  sued  for,  or  after  sixty  days’  default, 
stock  may  be  sold  at  public  auction  on  publishing  thirty  days’  notice. 
§ 1754.  No  calls  may  be  made  until  one-half  the  stock  has  been  sub- 
scribed and  twenty  per  cent,  paid  in.  § 1773;  Mining  Co.  v.  Sherman, 
74  Wis.  226. 

Increase  or  Decrease.  Is  effected  by  regular  amendment  of  ar- 
ticles. Same  fee  must  be  paid  on  amount  of  any  increase  as  on  origi- 
nal incorporation.  § 1772;  L.  1905,  Ch.  507.  (See  “Amendment  of 
Charter,”  under  § 6.) 

Classes  of  Stock.  May  be  created  either  on  incorporation  or 
subsequently  on  unanimous  consent  of  the  stockholders.  Preferred 
stock  may  be  cumulative  but  may  not  be  preferred  in  distribution  of 
assets.  § I7S9R-  All  privileges  accorded  to  preferred  stock  shall  be 
stated  on  all  certificates  both  of  preferred  and  common  stock.  L. 
1903,  Ch.  109. 

Par  Value  of  Shares.  Not  prescribed  by  law  but  is  to  be  stated 
in  articles  of  incorporation.  § 1772. 

Stock  Certificates.  Are  not  prescribed  as  to  form  or  contents, 
except  that  privileges  accorded  to  preferred  stock  must  be  stated 
on  the  certificate  both  of  preferred  and  common  stock.  L.  1903, 
Ch.  109. 

Transfer  of  Stock.  Transfers  or  pledges  of  stock  may  be  made 
by  endorsement  and  delivery  of  certificates,  but  are  not  valid  as  to 
third  parties  unless  entered  on  the  books  of  the  corporation.  § 1751. 
Transfer  on  books,  if  refused,  may  be  compelled  by  prescribed  legal 
procedure.  § 1752. 

8.  Stockholders. 

Rights  and  Powers.  A majority  vote  of  the  stock  is  necessary 
to  convey  or  mortgage  property.  §§  1748,  1775.  Three-fourths  vote 
necessary  to  hold  stock  of  other  corporations.  § 1775.  Two-thirds  vote 
required  for  amendments  of  articles  of  incorporation.  §§  1774,  1790- 
All  must  consent  to  issue  of  preferred  stock.  § 1759a.  Two  may 
call  meetings.  §§  1762,  1 773;  Luther  v.  Co.,  118  Wis.  112  (1903). 

Liability.  Stockholders  are  liable  for  unpaid  subscriptions,  and 
in  actions  to  enforce  such  liability  by  creditors,  credit  is  given  only 
for  actual  payments  in  money  or  its  equivalent,  and  not  for  dividends 
declared  and  applied  on  the  stock.  § 1758.  The  liability  of  any 
stockholder  may  be  released  by  the  corporation  on  transfer  of  the 
stock,  and  that  of  the  transferee  accepted  instead,  but  the  liability 
in  the  transferor  continues  as  to  claims  then  existing  or  incurred 


WISCONSIN. 


445 


within  six  months  thereafter,  and  is  recoverable  by  the  receiver  or 
assignee  of  the  corporation.  § 1756.  Stockholders  are  liable  for  un- 
lawful reduction  of  stock  and  illegal  dividends.  §§  1755,  1765.  Double 
liability  exists  for  claims  for  labor  not  exceeding  six  months’  services. 

§ 1769.  And  judgment  against  the  corporation  is  not  prerequisite  to 
enforcement.  Gilman  v.  Gross,  97  Wis.  224  (1897);  Smith  v.  Dickin- 
son, 100  Wis.  574  (1898);  McNaughton  v.  Ticknor,  113  Wis.  555 
(1902). 

Meetings.  Must  be  held  within  the  State.  Stats.,  p.  1272.  Elec- 
tions are  to  be  held  annually,  and  if  not  called  regularly  by  the  proper 
officers,  any  two  members  may  call  meeting  within  ten  days  after 
the  appointed  date,  in  the  manner  prescribed  for  first  meeting. 
§§  1762,  1773- 

Notice.  May  be  provided  in  by-laws.  When  all  the  stockholders 
are  present  and  sign  consent  on  the  record,  notice  may  be  waived. 
§§  1761,  1773- 

Quorum.  A majority  is  a quorum  unless  articles  of  incorpora- 
tion provide  otherwise.  § 1749. 

Voting.  Each  share  has  one  vote.  Voting  by  proxy  must  be 
permitted  at  elections,  and  at  other  meetings  if  so  provided  in  the 
by-laws.  § 1760. 

9.  Directors. 

Number.  Must  be  not  less  than  three;  may  be  changed  by  regu- 
lar amendment.  § 1774-  The  directors  may  be  divided  into  three 
classes,  one  to  be  elected  each  year.  § 1772. 

Qualifications.  The  directors  must  be  stockholders.  § 1776. 

No  requirements  as  to  residence,  except  that  principal  managing 
officer  must  be  resident.  § 1750.  (See  § 10,  “Officers.”) 

Powers.  The  directors  control  stock  held  by  their  corporation 
in  other  corporations.  § 1776a;  L.  1905,  Ch.  12.  They  remain  trus- 
tees on  dissolution.  § 1764.  They  may  be  given  special  powers  by 
charter  provision.  They  can  not  make  by-laws  unless  the  charter 
so  provides.  N.  Milwaukee,  etc.  Co.  v.  Bishop,  103  Wis.  492  (1899). 

Liability.  Dividends  must  not  be  paid  until  the  capital  stock 
has  been  fully  paid  in,  nor  otherwise  than  out  of  net  profits.  For 
payment  of  any  dividend  in  violation  of  these  provisions,  the  direc- 
tors render  themselves  jointly  and  severally  liable  for  corporate  debts 
due  at  the  time.  § 1765.  They  are  also  liable  if  they  transact  busi- 
ness before  one-half  the  capital  stock  is  subscribed  and  twenty  per 
cent,  thereof  actually  paid  in.  § 1773;  Williams  v.  Brewster,  117  Wis. 
370  (1903). 

Meetings.  Are  governed  by  by-laws.  § 1748.  A majority  is  re- 
quired for  a quorum.  § 1749- 

Executive  Committee.  No  statutory  provisions. 

10.  Officers. 

General.  A president  must  be  elected  by  the  directors  from  their 
number.  § 1776.  Other  officers  are  to  be  provided  for  and  their* 


446 


CLASSIFIED  CORPORATION  LAWS. 


duties  fixed  by  the  articles  of  incorporation  (§  1 772),  though  addi- 
tional officers  may  be  provided  for  by  the  by-laws.  § 1748,  5;  St. 
Clair  v.  Rutledge,  115  Wis.  583  (1902).  The  principal  managing  offi- 
cer or  superintendent  must  reside  in  the  State.  § 1750.  A list  of  the 
officers  must  be  filed  after  each  election  or  other  change,  specifying 
president,  vice-president,  secretary,  treasurer  and  cashier,  or  manag- 
ing agent  on  whom  process  may  be  served.  § 1775b;  L.  1899,  Ch.  46. 

Liability.  For  failure  to  file  reports  and  for  refusing  information 
from  books  or  as  to  stock,  officers  are  liable  for  all  resulting  damage 
and  to  fine  of  from  $25  to  $100.  § 1757;  L.  1905,  Ch.  347.  For  omitting 
to  make  entries  they  are  liable  to  fine  from  $25  to  $1,000  and  for  all 
damages.  § 1759.  Penal  provisions  as  to  embezzlement,  etc.,  exist. 
§§  4410,  4418,  4435,  4436.  The  circuit  court  has  jurisdiction.  § 32 37. 

11.  Principal  Office. 

Is  to  be  maintained  in  the  State.  § 1750.  It  may  be  changed  by 
regular  amendment.  § 1774.  An  agent  must  always  be  in  charge  to 
receive  service  of  process.  §§  1750,  1775b.  No  change  of  location  is 
valid  until  a certified  copy  of  the  articles  of  incorporation  is  recorded 
in  the  office  of  the  Register  of  Deeds  of  the  county  to  which  removal 
is  had.  § 1774. 

12.  Corporate  Books. 

What  Required.  A correct  and  complete  record  of  all  proceed- 
ings, including  election  of  officers,  is  required.  It  may  be  kept  in  a 
foreign  language  if  so  provided  in  articles  of  incorporation.  A stock 
book,  containing  the  names  of  all  members  since  the  organization, 
with  places  of  residence,  amount  of  stock  held,  time  of  acquiring 
stock  or  becoming  member,  time  of  transfers  or  cessation  of  mem- 
bership, must  be  kept.  § 1759.  Also  books  of  account  must  be  kept. 
§ I7SO. 

Where  Kept.  Books  must  be  kept  at  principal  office  in  the  State. 

§ 1750. 

Examination  of.  The  stock  and  account  books  must  at  all  rea- 
sonable times  be  open  to  the  inspection  of  stockholders.  Creditors 
are  entitled  to  information  at  any  time  as  to  amount  of  capital  stock 
subscribed,  amount  paid  in,  names  of  stockholders,  number  of  shares 
owned  by  each,  amounts  unpaid  on  shares,  and  if  any  shares  have 
been  transferred  within  six  months  of  inquiry,  the  name  of  the  trans- 
feree, with  amount  due  at  the  time  of  the  transfer.  § 1757.  A state- 
ment of  assets  and  liabilities  must  be  on  file  at  the  principal  office  at 
least  once  in  each  year,  duly  verified  by  the  treasurer  or  other  proper 
officer.  § 1750. 

13.  Reports. 

Business  corporations  must  annually  in  January  file  with  the 
Secretary  of  State  a report,  sworn  to  by  one  of  the  principal  officers, 
stating:  (1)  Name  of  corporation  and  location,  giving  street  and 


WISCONSIN. 


447 


number.  (2)  Name  and  address  of  officers  and  directors.  (3)  Amount 
of  authorized  capital  stock.  (4)  Amount  actually  paid  in,  in  money, 
property  and  services.  (5)  Whether  engaged  in  active  business  dur- 
ing preceding  year.  (6)  Nature  of  business  transacted  during  the 
year.  (7)  In  what  states  the  corporation  is  licensed  to  do  business 
as  a foreign  corporation.  Penalty  for  failure,  $10  up  to  June  1st; 
after  that  date  Secretary  of  State  publishes  notice  of  such  failure,  in 
the  county  where  corporation  is  located;  and  Register  of  Deeds  posts 
list  of  defaulting  corporations.  If  not  filed  by  January  1st  following, 
Secretary  of  State  enters  the  forfeiture  of  charter  on  his  records. 
Forms  are  sent  out  by  Secretary  of  State,  during  December.  L.  1905, 
Ch.  507,  adding  § 1774a. 

On  any  change  in  officers,  names  and  addresses  of  officers  elected 
must  be  filed  with  Secretary  of  State  within  twenty  days  after  such 
change.  L.  1905,  Ch.  507.  List  of  officers  must  also  be  filed  with 
Register  of  Deeds  within  ten  days  after  change,  including  name  of 
agent  on  whom  process  may  be  served.  § 1775b;  L.  1899,  Ch.  46. 
Affidavit  must  be  attached  to  annual  report,  fully  stating  the  facts  as 
to  the  corporation’s  relation  to  any  trust,  pool  or  combination,  etc. 
§ I79D';  L.  1905,  Ch.  507. 

Change  of  name  must  be  published  three  weeks  on  penalty  of 
fine  of  $25.  § 1774.  Publication  of  notices  of  meeting  may  always 

be  avoided  by  waiver.  §§  1761,  1773- 

14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  A foreign  corporation  before 
doing  business  in  the  State  must  file  a duly  authenticated  copy  of 
charter  and  amendments  thereto  with  the  Secretary  of  State  (§  1770b), 
and  also  a statement  verified  by  the  proper  officer,  stating:  (a)  Name 
of  corporation  and  location  of  principal  office  or  place  of  business 
within  and  without  the  State;  (b)  names  and  addresses  of  officers, 
and  of  agent  or  manager  to  represent  corporation  in  the  State;  (c) 
amount  of  capital  stock  paid  in  money,  property  or  services;  (d) 
nature  of  business  to  be  transacted  in  the  State;  (e)  proportion  of 
capital  stock  represented  by  property  held  or  business  done  in  the 
State  as  shown  by  one  year’s  business  next  preceding;  also,  (f)  con- 
stituting and  appointing  the  Secretary  of  State  its  attorney  on  whom 
service  may  be  made;  (g)  stating  when  the  corporation  was  au- 
thorized; and  (h)  that  it  will  comply  with  the  laws  of  the  State  with 
regard  to  foreign  corporations.  L.  1905,  Ch.  506.  Fees  are  $25,  and 
$1  for  each  $1,000  of  capital  stock,  exceeding  $25,000,  employed  with- 
in the  State.  Any  subsequent  amendment  must  be  filed  within  thirty 
days  after  its  adoption  in  the  home  state,  and  fee  paid  of  $10,  and 
on  increase  of  stock,  in  addition,  $1  for  each  $1,000  of  increase.  Id., 
§ 5.  Affidavit  must  be  attached  that  corporation  has  not  violated 
provisions  of  anti-trust  law.  § 1770I1. 

Penalties  for  Non-Compliance.  All  contracts  are  void  (L.  1905, 
Ch.  506,  § 10)  but  enforceable  against  the  corporation.  Liability  to  a 
fine  of  $500  is  incurred.  Id.,  §11.  License  is  revoked  for  attempt  to 
remove  any  action  brought  against  it  by  citizens  of  the  State,  into  the 
United  States  courts.  Id.,  § 6.  Also  for  violation  of  anti-trust  law, 
which  is  aimed  more  especially  at  foreign  corporations.  § i77of-i. 


448 


CLASSIFIED  CORPORATION  LAWS. 


(Wisconsin) 

Taxation.  The  same  as  of  domestic  corporations  of  the  same 
class. 

Books.  Foreign  corporations  are  subjected  to  all  the  laws  ap- 
plicable to  domestic  corporations.  L.  1905,  Ch.  506,  § 10. 

Reports.  On  any  change  in  officers,  certificate  of  the  names  and 
addresses  of  the  officers  elected  must  be  filed  with  the  Secretary 
of  State  within  twenty  days  after  such  change.  L.  1905,  Ch.  506,  § 6. 
Annually,  during  the  month  of  January,  every  foreign  corporation 
must  file  with  the  Secretary  of  State  a report  verified  by  one  of  its 
chief  officers,  as  of  January  1st,  stating  practically  the  same  facts 
required  in  the  original  statement  filed,  but  in  addition  the  total 
amount  of  business  transacted  by  the  corporation  during  the  pre- 
ceding year,  and  the  true  value  of  all  its  property,  and  the  same  facts 
as  referring  to  the  State  of  Wisconsin.  Fee,  $2,  but  if  the  report 
shows  an  increase  of  stock  since  last  report,  also  $1  for  each  $1,000 
of  increase.  Penalty  for  not  filing,  $25  up  to  April  1st;  after  that 
date,  the  license  may  be  revoked.  Id.,  § yh.  Affidavit  must  be  at- 
tached that  corporation  is  not  guilty  of  any  violation  of  anti-trust 
law.  § i77oh. 

Attachments  Against.  Lie  on  ground  of  being  a foreign  corpora- 
tion. § 2731. 

15.  Combinations  and  Monopolies. 

Are  prohibited.  §§  I747e-h,  i79ij-m.  Special  prohibitive  provi- 
sions apply  to  foreign  corporations.  § i77of-i.  Fines  for  each  of- 
fence, $50  to  $3,000  (§  i747e)  and  liability  for  damages;  and  corpor- 
ate franchise,  or  license  of  foreign  corporation  is  annulled.  §§  i77og,  i; 
1791m,  1. 


WYOMING. 


1.  Corporation  Laws.* 

Constitution.  (1889.)  Corporations  may  only  be  created  under 
general  laws.  Art.  X,  § 1.  Their  control  is  reserved  to  State.  Id., 
§ 2;  Art.  I,  § 30.  Corporations  must  accept  Constitution  before  doing 
business  in  the  State.  Art.  X,  § 5.  May  engage  in  but  one  general 
line  or  department  of  business,  to  be  distinctly  specified  in  charter. 
Id.,  § 6.  Trusts  are  prohibited.  Id.,  § 8.  Investment  of  trust  funds 
in  stocks  or  bonds  of  private  corporations  is  prohibited.  Art.  Ill, 
§ 38.  Public  ownership  or  interest  in  corporations  is  prohibited.  Art. 
XVI,  § 6. 

Statutes.  Private  corporations  are  formed  under  Division  2, 
Title  4,  of  the  Revised  Statutes  pf  1899,  of  which  Chapters  1 and  12 
(amended  by  L.  1903,  Ch.  53;  L.  1905,  Ch.  13)  contain  general  pro- 
visions; Chapter  13  (amended  by  L.  1901,  Ch.  83;  L.  1903,  Ch.  40) 
treats  of  foreign  corporations,  and  the  intervening  chapters  treat  spe- 
cially of  banks,  building  and  loan,  insurance,  railroad,  fraternal,  fair, 
church  and  eleemosynary,  agricultural  and  stock,  and  guarantee  cor- 
porations. 

Under  the  general  law  corporations  may  be  formed  for  any  man- 
ufacturing, mining,  chemical,  merchandising  or  mechanical  business, 
constructing  wagon  roads,  railroads,  telegraph  lines,  ditches,  flumes, 
tunnels,  dealing  in  real  estate  or  carrying  on  any  other  branch  of 
business  designed  to  aid  in  the  industrial  or  productive  interests  of 
the  country.  § 3029. 

2.  Taxes  and  Fees. 

Organization  Expenses.  To  Secretary  of  State:  On  filing  cer- 
tificate of  incorporation  with  capital  stock  not  exceeding  $5,000,  $5; 
from  $5,000  to  $100,000,  $10;  over  $100,000,  $10  and  5 cents  additional 
for  each  $1,000  of  capital  stock  in  excess  of  $100,000.  § 3030.  This 

fee  also  covers  filing  and  recording  of  certificate.  § 3031.  For  cer- 
tificate and  seal,  $1  (§  66);  filing  proof  of  publication,  $1  (L.  1905, 
Ch.  13);  filing  certificate  of  agent,  $2.50.  L.  1903,  Ch.  53. 

To  County  Clerk:  Recording  fees,  50  cents  for  first  100  words 

and  10  cents  a folio  for  excess;  for  copies,  15  cents  per  folio;  certifi- 
cate and  seal.  50  cents.  § 1155. 

For  publication  of  notice  of  incorporation,  $5  for  the  three 
notices.  L.  1905,  Ch.  13. 

* References  are  to  the  Revised  Statutes  of  1899,  unless  otherwise  noted. 


449 


450 


CLASSIFIED  CORPORATION  LAWS. 


Franchise  Tax.  None  imposed. 

Local  Taxation.  Capital  stock  of  domestic  corporations  is  not 
taxed.  § 1774-  On  property  owned  they  are  taxed  as  individuals.  Id. 

3.  Incorporation. 

Incorporators.  May  be  any  three  or  more  persons.  § 3029.  No 
requirements  as  to  residence. 

Certificate  of  Incorporation.  Must  be  signed  and  acknowledged 
in  duplicate  by  the  incorporators,  and  must  state  (§  3029)  : 

(1)  Name  of  the  company.  May  be  changed  by  regular 
amendment.  § 3054. 

(2)  Object  for  which  it  is  formed.  Must  be  confined  to 
one  line  or  department  of  business.  Const.,  Art.  X,  § 6. 

(3)  Amount  of  capital  stock.  No  statutory  limitations. 
Preferred  stock  may  be  provided  for.  § 3042. 

(4)  Term  of  existence,  not  to  exceed  fifty  years. 

(5)  Number  of  shares  of  which  the  stock  shall  consist. 
Par  value  not  prescribed. 

(6)  Number  and  names  of  trustees  to  manage  the  cor- 
porate concerns  for  the  first  year. 

(7)  Name  of  town  or  county  in  which  the  operations  of 
the  company  are  to  be  carried  on.  If  the  company  is  formed 
to  carry  on  any  part  of  its  business  in  other  states,  the  cer- 
tificate of  incorporation  must  so  state,  and  must  name  the 
town  or  county  within  the  State  in  which  the  principal  part 
of  its  business  therein  is  to  be  transacted.  § 3034. 

If  by-laws  are  to  be  adopted  by  the  trustees,  the  certificate  should 
so  provide.  § 3039. 

Filing  and  Recording.  One  copy  of  the  certificate  of  incorpora- 
tion is  filed  for  record  in  the  office  of  the  clerk  of  the  county  in 
which  the  business  of  the  company  is  to  be  carried  on.  The  other 
is  filed  with  the  Secretary  of  State  and  is  recorded  by  that  officer. 
§§  3029,  3032.  A certificate  must  be  filed  with  the  Secretary  of  State 
within  ninety  days  thereafter,  designating  the  location  of  the  princi- 
pal office  in  the  State  and  the  agent  in  charge  upon  whom  service 
may  be  made.  L.  1903,  Ch.  53.  An  acceptance  of  the  State  Constitu- 
tion must  be  filed  and  recorded  with  the  Secretary  of  State.  § 3058; 
Const.,  Art.  X,  § 5. 

A notice  of  the  incorporation  must  also  be  published  within 
thirty  days  after  the  filing  with  the  Secretary  of  State,  containing  the 
name  of  the  corporation;  the  object  for  which  it  is  formed;  amount 
of  capital  stock;  term  of  existence;  number  of  shares  of  which  the 
stock  shall  consist;  number  of  trustees  and  names  of  those  who  are 
to  manage  the  business  for  the  first  year;  name  of  town  and  county 


WYOMING. 


451 


in  which  operations  are  to  be  carried  on;  the  location  (by  town  or 
city,  and  street  and  number,  if  any)  of  principal  office  in  the  State, 
with  name  of  agent  in  charge  thereof.  This  is  to  be  published  three 
times  in  a newspaper  of  general  circulation  in  the  State,  and  proof  of 
such  publication  must  be  filed  with  the  Secretary  of  State  within  said 
thirty  days.  L.  1905,  Ch.  13. 


4.  Organization. 

First  Meetings.  Of  stockholders  must  be  held  within  the  State. 
§§  303 4,  3083.  No  special  provisions  otherwise  as  to  first  meetings. 
The  first  trustees  are  named  in  the  certificate.  § 3029. 

By-Laws.  May  be  adopted  by  the  trustees  if  the  certificate  of 
incorporation  so  provides.  By-laws  may  prescribe  the  disposition 
of  the  stock  of  the  company,  the  management  of  its  business  affairs, 
the  duties  of  officers  and  their  appointment,  and  provide  for  carry- 
ing on  all  kinds  of  business  within  the  corporate  purpose.  §§  3039, 
3078. 

Certificates.  A certificate  must  be  filed  with  Secretary  of  State 
within  ninety  days  after  incorporation,  designating  principal  office 
and  agent,  in  charge  thereof  on  whom  process  may  be  served.  L.  1903, 

Ch.  53. 

5.  Corporate  Existence. 

When  Commenced.  On  filing  certificate  of  incorporation  with 
Secretary  of  State.  § 3032.  May  last  fifty  years.  § 3029.  Extends 
beyond  expiration  or  dissolution,  with  directors  as  trustees,  for  wind- 
ing up  affairs.  § 3260. 

Beginning  Business.  May  be  commenced  as  soon  as  certificate 
of  incorporation  and  acceptance  of  State  Constitution  has  been  filed 
with  Secretary  of  State.  § 3058;  Const.,  Art.  X,  § 5.  Must  be  be- 
gun within  five  years.  § 4233. 

Renewal.  No  provisions. 

Forfeiture  of  Charter.  Occurs  on  failure  to  publish  notice  of 
incorporation  and  file  proof  thereof  with  Secretary  of  State.  L.  1905, 
Ch.  13.  Also  for  failure  to  file  certificate  of  principal  office  and  agent 
within  ninety  days.  L.  1903,  Ch.  53.  Quo  warranto  lies  for  non-user 
for  five  years  or  misuser,  etc.  §§  4214,  4233-4246. 

Dissolution.  May  be  effected  by  two-thirds  vote  of  the  stock  and 
publication  of  notice  thereof  at  least  six  weeks  in  each  county  in 
which  certificate  of  incorporation  was  filed,  together  with  filing  of 
such  notice  with  Secretary  of  State  and  county  clerks.  Dissolution 
can  not  be  had  until  the  debts  of  the  corporation  have  been  fully 
paid.  §§  3258,  3260-3264. 


452 


CLASSIFIED  CORPORATION  LAWS. 


6.  Corporate  Powers. 

General.  Common  law  powers  are  enumerated.  §§  3032,  3078. 

To  Hold  Property.  This  power  is  given  so  far  as  is  necessary 
for  the  corporate  purpose.  §§  3032,  3046,  3078. 

Its  Own  Stock.  The  corporate  funds  may  not  be  used 
in  purchase  of  its  own  stock.  § 3040. 

Stock  of  Other  Corporations.  A corporation  may,  in 
its  discretion  and  to  any  amount,  purchase,  hold  and  own  stock  in 
any  other  company  that  is  subsidiary  and  tributary  to  the  holding 
company,  and  that  does  contribute  to  the  objects  and  purposes  of  the 
holding  company.  This  is  a proviso  to  a general  prohibition  of  the 
power.  § 3040. 

To  Borrow  Money.  If  the  corporate  indebtedness  at  any  time 
exceeds  the  amount  of  the  capital  stock,  the  trustees  of  such  com- 
pany are  liable  for  the  excess.  §§  3049,  3053. 

To  Do  Business  in  Other  States.  The  power  may  be  secured  by 
proper  provision  in  the  certificate  of  incorporation.  § 3034.  An  office 
and  agent  must,  however,  always  be  maintained  in  the  State.  § 3034; 
L.  1903,  Ch.  53;  L.  1905,  Ch.  13. 

Consolidation  or  Merger.  To  prevent  competition,  to  control  or 
influence  productions  or  prices,  or  in  any  manner  interfere  with  pub- 
lic good  or  general  welfare,  is  prohibited.  Const.,  Art.  X,  § 8.  No 
other  provisions. 

Amendment  of  Charter.  May  be  had  to  increase  or  diminish 
capital  stock,  extend  or  change  the  corporate  business,  change  cor- 
porate name  or  the  number  of  directors  (§  3029),  by  a two-thirds 
vote  of  the  outstanding  stock  at  a meeting  called  for  the  stated  pur- 
pose by  an  officer  on  written  application  of  a majority  of  the  stock. 
Notice  stating  the  proposed  amendment  and  signed  by  such  officer 
must  be  published  in  a newspaper  in  the  county  where  the  principal 
office  in  the  State  is  located  at  least  four  weeks,  and  must  also  be 
mailed  to  each  stockholder  at  least  fifteen  days  before  the  meeting. 
Certificates  of  all  the  facts  are  to  be  executed  by  the  chairman  and 
secretary  of  the  meeting,  and  filed  and  recorded  in  the  same  manner 
as  the  original  certificate  of  incorporation.  §§  3053-3056. 

7.  Capital  Stock. 

Amount.  Not  prescribed. 

Initial  Payment.  Ten  per  cent,  of  the  capital  stock  must  be 
paid  within  one  year  from  incorporation.  § 3045. 

Consideration  for  Issue.  The  trustees  may  purchase  mines,  man- 
ufactories or  other  properties  necessary  for  their  business,  and  issue 
stock  to  the  amount  of  the  value  thereof,  and  the  stock  so  issued  shall 
be  full  paid  stock;  but  in  all  statements  and  reports  such  stock  must 
be  reported  according  to  the  facts.  § 3046.  Certificate  of  full  pay- 
ment of  capital  stock,  sworn  to  by  president  and  a majority  of  the 


WYOMING. 


453 


trustees,  must  be  recorded  in  the  office  of  register  of  deeds  within 
thirty  days  after  last  instalment.  § 3047.  Assessments,  not  exceed- 
ing 10  per  cent,  in  any  one  month,  may  be  made  by  the  directors  or 
trustees  in  their  discretion.  The  shares  and  all  previous  payments 
are  forfeited  on  default  of  sixty  days  after  personal  demand  or  six 
weeks’  publication  of  notice  of  assessment.  § 3038. 

Increase  or  Decrease.  Is  had  by  regular  amendment  (§§  3053- 
3056),  but  before  any  corporation  may  diminish  its  capital  stock,  the 
corporate  debts  and  liabilities  must  be  satisfied  or  reduced  so  as  not 
to  exceed  such  diminished  amount.  § 3053.  The  notice  of  meeting 
must  state  the  amount  to  which  it  is  proposed  to  increase  or  decrease 
the  stock.  § 3054.  The  certificate  filed  must  show  amount  of  capital 
paid  in  and  amount  of  debts  and  liabilities.  § 3056. 

Classes  of  Stock.  May  be  created  by  unanimous  assent  of  the 
stockholders  at  any  annual  meeting  or  at  any  meeting  called  for  the 
purpose  as  for  amendment  of  certificate  of  incorporation  (See 
“Amendment  of  Charter,”  under  § 6),  a certificate  thereof  to  be 
similarly  filed  and  recorded.  § 3041.  Or  such  preferred  stock  may 
be  provided  for  in  certificate  of  incorporation.  § 3042.  Dividends 
must  not  exceed  seven  per  cent.;  net  earnings  beyond  that  amount 
to  be  shared  equally  among  the  stockholders.  § 3041.  Holders  of 
common  stock  to  have  prior  right  to  subscribe  for  preferred  stock 
in  proportion  to  their  holdings.  § 3043. 

Par  Value  of  Shares.  Not  prescribed. 

Stock  Certificates.  Not  prescribed  as  to  form  or  contents. 

Transfer  of  Stock.  To  be  regulated  by  by-laws.  § 3040. 

8.  Stockholders. 

Rights  and  Powers.  They  control  amendments,  dissolution,  etc., 
by  a two-thirds  vote.  §§  3053-3056,  3258.  A majority  may  order 
special  meetings.  § 3054. 

Liability.  The  stockholders  are  liable  only  for  unpaid  assess- 
ments on  their  stock.  §§  3038,  3045,  3046. 

Meetings.  Must  be  held  annually  for  the  election  of  trustees. 
Time  and  place  to  be  appointed  by  by-laws.  § 3035.  Must  be  within 
the  State.  §§  3034,  3083. 

Notice.  Must  be  published  not  less  than  ten  days  before  the 
meeting  in  the  newspaper  printed  nearest  to  the  place  where  opera- 
tions are  carried  on.  § 3035.  If  election  is  not  held  on  the  designated 
date,  it  may  be  called  at  any  time  thereafter  in  such  manner  as  the 
by-laws  may  prescribe.  § 3036. 

Quorum.  Must  be  at  least  one-half  the  stock.  § 3035. 

Voting.  At  elections  must  be  by  ballot,  each  stockholder  hav- 
ing as  many  votes  as  he  owns  shares.  § 3035. 

Proxies.  Voting  may  be  in  person  or  by  proxy.  §§  3035,  3056. 


454 


CLASSIFIED  CORPORATION  LAWS. 


g.  Trustees. 

Number.  They  must  be  not  less  than  three  nor  more  than  nine. 
§ 3035-  Number  may  be  changed  by  amendment.  §§  3029,  3053-3056. 

Qualifications.  Trustees  must  be  stockholders.  § 3035. 

Powers.  They  have  the  usual  powers.  They  fill  vacancies  on 
the  board  if  the  by-laws  so  provide.  § 3035.  Adoption  of  by-laws 
may  be  delegated  to  them  by  certificate  of  incorporation.  § 3039. 

Liability.  For  declaring  and  paying  any  dividend  when  the  com- 
pany is  insolvent  or  which  would  render  it  insolvent  or  would  diminish 
the  capital  stock,  the  trustees  are  jointly  and  severally  liable  for  cor- 
porate debts  then  existing,  or  contracted  while  they  remain  in  office. 
To  escape  liability,  objection  in  writing  must  be  filed  with  the  clerk 
or  secretary  of  the  company  and  with  the  register  of  deeds  of  the 
proper  county,  before  payment  of  the  dividend.  § 3048.  For  per- 
mitting corporate  debts  to  exceed  amount  of  capital  stock,  they  are 
liable  for  such  excess.  § 3049.  Penalties  are  imposed  for  signing, 
issuing  or  assigning  false  stock  certificates.  §§  5157,  5158. 

Meetings.  Are  to  be  governed  by  the  by-laws. 

Executive  Committee.  May  be  provided  for  by  by-laws.  §§  3037, 
3039,  3078. 

10.  Officers. 

General.  A president,  who  must  be  one  of  the  trustees,  is  pre- 
scribed, and  such  other  officers  as  the  by-laws  may  designate.  They 
may  be  elected  or  appointed  and  may  be  required  to  give  security. 
§ 3037. 

11.  Principal  Office. 

One  or  more  places  of  business  may  be  designated  in  the  cer- 
tificate of  incorporation  (§  3033),  within  or  without  the  State,  but  one 
office  must  always  be  maintained  in  the  State  (§  3034)  with  an  agent 
in  charge  on.  whom  process  may  be  served.  L.  1903,  Ch.  53. 


12.  Corporate  Books. 

What  Required.  Stock  books  are  necessary  to  comply  with  the 
requirements  of  the  statute.  § 3055. 

Where  Kept.  Not  prescribed. 

Examination  of.  A list  of  all  stockholders  with  their  residence 
must  be  furnished  by  the  custodian  of  the  stock  books  to  the  officer 
who  orders  meetings.  § 3055.  The  treasurer  is  also  required  to 
furnish  detailed  financial  statement  of  the  corporate  affairs  under 
oath,  on  written  request  of  not  less  than  15  per  cent,  of  the  stock, 
and  such  statement  is  to  be  kept  at  the  treasurer’s  office,  open  to  in- 


WYOMING. 


455 


spection  for  six  months,  and  may  be  renewed  each  six  months.  There 
is  a penalty  of  $50  and  $10  additional  for  each  twenty-four  hours  de- 
lay after  twenty  days  from  such  request.  § 3057. 


13.  Reports. 

None  required  except  certificate  of  full  payment  of  capital  stock 
(§  3047)}  (See  “Consideration  for  Issue,”  under  § 7)  and  certificate  of 
agent  and  office  in  the  State.  L.  1903,  Ch.  53.  (See  “Certificates,” 
under  § 4.) 

Publication  is  required  three  times  of  notice  of  incorporation, 
setting  forth  all  the  facts  of  the  certificate.  L.  1905,  Ch.  13.  Also 
various  notices  of  meetings,  usually  for  four  weeks;  of  dissolution, 
six  weeks;  of  change  of  name,  four  weeks;  of  annual  election,  ten 
days.  §§  3035,  3054,  3258. 


14.  Foreign  Corporations. 

How  Authorized  to  Do  Business.  No  foreign  corporation  is  per- 
mitted to  transact  business  in  the  State  until  it  has  accepted  the  Con- 
stitution of  the  State  and  filed  such  acceptance  in  accordance  with 
law.  § 3058;  Const.,  Art.  X,  § 5. 

Every  foreign  corporation  must  within  thirty  days  after  com- 
mencing business  in  the  State  file  in  the  office  of  the  Secretary  of 
State  and  also  in  the  office  of  the  Register  of  Deeds  of  the  county  in 
which  such  business  is  conducted,  a copy  of  its  charter  or  of  its  cer- 
tificate of  incorporation  with  a copy  of  the  general  law  under  which 
it  is  incorporated,  duly  authenticated  by  the  proper  authorities  of  the 
state  or  country  in  which  it  was  organized.  § 3265.  Fees  are  the  same 
as  on  incorporation  of  domestic  corporations.  § 3030.  Filing  fee  to 
Register  of  Deeds  of  $1  for  each  paper.  § 3269.  Copies  of  charter 
must  be  filed  with  the  county  clerks  of  the  counties  in  which  it  trans- 
acts business.  L.  1903,  Ch.  40. 

Penalties  for  Non-Compliance.  Personal  liability  of  all  officers, 
agents  and  stockholders  for  the  corporation’s  debts  and  forfeiture  of 
right  to  do  business,  to  be  restored  by  compliance  and  payment  of 
$5  per  diem  for  time  of  default.  § 3268;  L.  1901,  Ch.  83. 

Taxation.  The  amount  paid  in  on  capital  stock  and  any  accumu- 
lated surplus  (exclusive  of  real  estate)  is  taxed  as  if  owned  by  an 
individual.  § 1774.  There  are  special  regulations  for  foreign  insur- 
ance and  building  and  loan  companies.  §§  3271-3279.  No  annual 
license  tax. 

Books.  No  special  requirements. 

Reports.  Are  required  only  of  corporations  enjoying  special 
franchises. 

Attachments  Against.  Lie  against  as  foreign  corporations.  § 4452. 


CLASSIFIED  CORPORATION  LAWS. 


(Wyoming) 


456 


15.  Combinations  and  Monopolies. 

Perpetuities  and  monopolies  are  contrary  to  the  genius  of  a 
free  state  and  shall  not  be  allowed.  Const.,  Art.  I,  § 30.  Consolida- 
tion to  prevent  competition,  or  to  control  productions  or  prices,  or 
to  interfere  with  the  public  good  or  general  welfare,  is  prohibited. 
Id.,  Art.  X,  § 6.  No  statutes  have  been  passed  directly  prohibiting 
combinations  or  monopolies. 


INDEX 


(References  are  to  pages.) 

Alabama  9 

Alaska  18 

Arizona  25 

Arkansas  31 

California  39 

Colorado  50 

Connecticut  60 

Delaware  68 

District  of  Columbia  80 

Florida  8 7 

Georgia  94 

Hawaii  101 

Idaho  107 

Illinois  116 

Indiana  125 

Indian  Territory  134 

Iowa  135 

Kansas  143 

Kentucky  152 

Louisiana  159 

Maine  166 

Maryland  175 

Massachusetts  183 

Michigan  194 

Minnesota  203 

Mississippi  212 

Missouri  219 

Montana  228 

Nebraska  237 

Nevada  244 

New  Hampshire  254 

New  Jersey  261 

New  Mexico  272 

New  York  280 

North  Carolina  298 

North  Dakota  307 

Ohio  316 


457 


458 


INDEX. 


(References  are  to  pages.) 

Oklahoma  325 

Oregon  332 

Pennsylvania  339 

Philippine  Islands  350 

Porto  Rico  351 

Rhode  Island  359 

South  Carolina  365 

South  Dakota  373 

Tennessee  383 

Texas  390 

Utah  397 

Vermont  405 

Virginia  4I2 

Washington  422 

West  Virginia  429 

Wisconsin  440 

Wyoming  449 


1- 


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VAaLij 


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08-08  STD 


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